Household Debt in Russia Over 170 Billion Euros

reliable future consumer credit coopReliable Future Consumer Credit Cooperative is one of many retail lenders ready to help ordinary Russians “boost their standard of living.” Photo by the Russian Reader

Household Debt of Russians Exceeds Twelve Trillion Rubles
Half of This Amount Was Borrowed Over the Last Year
Emma Terchenko
Vedomosti
January 31, 2018

This emerges from statistics gathered by the United Credit Bureau (OKB), based on information about the outstanding loans of 82 million Russians.

According to the Russian Central Bank, the Russian populace’s bank debt grew by 13.2% in 2017 to 12.2 trillion rubles [approx. 170.75 billion euros].

The OKB’s calculations show the number of new loans grew more slowly than their total amount. Over the past year, loans increased by 37% compared to 2016 (by 4.14 trillion rubles), whereas their quantity increased only by 12% to 34.8 million individual outstanding loans.

Moreover, an increase was observed in all segments of the loan market—mortgages, cash loans, auto loans, and credit cards—according to the OKB’s statistics.

Banks mostly disbursed money to Russians in the form of cash loans: nearly 3 trillion rubles or 33% more than in 2016. The number of such loans reached 24.7 million units, an increase of 14%.

The total amount of mortgages issued for the year increased by 42% to 1.8 trillion rubles, while the total number rose by nearly a third to 959,237 individual mortgages. According to Rusipoteka, a financial analytics company, 53% of the housing mortages issued last year were supplied by Sberbank.

In November, the mortgage portfolios of Russian banks exceeded a record five trillion rubles, the Central Bank reported previously.

“Afer the crisis, banks tried to build up their mortgage portfolios. Many of them reduced their down payments to accomplish this. Therefore, amongst the loans issued last year, around a third had down payments of less than 20%,” says Rusipoteka director Sergei Gordeiko.

According to the OKB, auto loans for all of 2017 increased by 36% to 333.3 billion rubles or by 25% to 436,539 individual loans. The National Credit History Bureau (NBKI) estimated the annual growth of auto loans at 29%.

“Auto loans have returned to pre-crisis levels, and the share of cars bought on loan has been growing,” notes NBKI’s director general Alexander Vikulin. “In 2017, every other automobile in Russia was purchased with a loan.”

The OKB claims credit cards are the fastest growing segment. Although the number of new credit cards issued last year grew only by 8% to 8.65 million cards (this figure excludes replacement cards), their total limit increased by less than half: by 48% to 544.5 billion rubles.

According to the NBKI, the number of newly issued credit cards grew by 52.6% to 6.87 million units in 2017. Equifax reported an 52% increase to six million new cards issued on the year.

The reason for the discrepancy is the databases of creditors monitored by the various credit bureaus differ. Unlike other credit bureaus, the OKB receives all information about loans made by Sberbank, which, according to different estimates, accounts for 42% to 46% of the loan market. The NBKI, for example, does not monitor figures from Home Credit Bank. None of the three bureaus—OKB, NBKI, and Equifax—take Russian Standard Bank’s statistics into account.

With its share of the credit card market, Sberbank has an impact on discrepancies in the calculations of the OKB and the other bureaus, argues Frank RG director general Yuri Gribanov.  According to Frank RG’s data, based on the management statements of banks and taking into account the utilization of credit limits and overdue debts, Sberbank’s portfolio of credit cards and overdrafts constituted 42.5% of the overall portfolio of all Russian banks as of December 1, 2017. During the year, it grew by 16.4% to 559.6 billion rubles.

A Sberbank spokesperson did not provide exact figures for the issuing of new credit cards last year, but confirmed they had not grown, remaining at a “consistently high level.”

Tinkoff Bank issued 2.41 million new credit cards in 2017, 43% more than the previous year, while Sovkombank issued more than a million credit cards. Vostochny Bank increased its issuing of credit cards by 140%, OTP Bank, by 135%, and VTB Bank by 13% (440,000 cards).

“The main reason for the growth is that banks have returned to sales channels that were frozen after 2015, for example, lending to walk-in customers,” says Alexei Shchavelev,  director of the cross-selling department at OTP Bank.

“In addition, many banks now have built up a broad base of quality customers: payroll customers, debit card holders, borrowers. It is now much easier for them to sell credit cards, because this customer base has been clarified,” Pavel Samiyev, managing director of the National Rating Agency, explains.

The demand for credit cards from borrowers themselves has been caused by the growth of consumer activity in general and improved customer solvency, argues Rostislav Yanykin, director of Russian Standard’s credit card sales. In the fight for customers, banks have been offering increasingly advantageous terms for using credit cards, he admits.

People who take out loans to boost their standard of living have mainly fueled the growth in lending to the populace, argues Nataliya Orlova, chief economist at Alfa Bank.

“In the past two years, they suffered more than others from the crisis in terms of reduced purchasing power.”

According to NBKI’s Vikulin, retail lending has been growing due to the economy’s stabilization.

Translated by the Russian Reader

NB. According to a May 17, 2017, article in the New York Times, household debt in the US had risen to $12.73 trillion in the first quarter of 2017, a new peak. Converted into rubles, this would amount to approx. 742 trillion rubles at current exchange rates. Based on the latest UN estimates, the current population of the US is nearly 327 million people, while the population of the Russian Federation is nearly 144 million people, based on the same estimates. In 2016, GDP (PPP) per capita in the US was over $57,000, while it was just over $23,000 in Russia, according to figures published by the World Bank. TRR

Xenophobia and Corruption Making Russia Less Attractive to Central Asian Migrant Workers

DSCN3525To give only one of a thousand examples, without Central Asian migrant workers, there would be almost no one left to do the heavy and, sometimes, dangerous work of clearing freshly fallen snow from rooftops and pavements during the winter. February 5, 2018, Petersburg. Photo by the Russian Reader

Fists and Epaulettes: Xenophobia and Corruption Making Russia Less Attractive to Central Asian Migrant Workers
Vyacheslav Polovinko and Yulia Reprintseva, with Madina Kuanova
Novaya Gazeta
February 5, 2018

Novaya Gazeta continues to investigate the lives of migrant laborers in Russia. In our last issue, we discussed the magnitude of the corruption faced by immigrants when they apply for resident permits and work permits (“Luck and Labor,” February 2, 2018). However, even when migrant workers finally obtain these papers, their lives in Russia are not made any easier.

Police, Open Up!
In the run-up to New Year’s 2018, detectives from the Perovo and Kuntsevo police precincts in Moscow detained 520 migrant workers. All of them were taken to a police station, where they were forced to stand outside in the cold from six in the evening to two in the morning. According to Valentina Chupik, head of the human rights organization Tong Jahoni (Morning of the World), only those who gave the police 10,000 rubles [approx. 140 euros] each were released. The police said they were collecting money “for celebrating the holiday.”

The police regularly hold such “celebrations” for migrant workers. In a ranking of offenses against immigrants, the police take first place with a large margin (86% of all complaints). Most often, the police extort money during groundless document checks.

“In Russia, the attitude is he is an Asian, so he’ll give us money,” claims Chupik.

In police stations, up to twelve migrant workers are held in seven-meter-square cells for forty-eight hours and not allowed to go to the toilet. Police sometimes assault them. In October 2017, according to human rights activists, the officers at Perovo and Novogireevo precincts in Moscow beat up 39 people.  It was a tough month, apparently.

“Volunteer work days” are another police practice. According to human rights activists, migrant workers were forced to repair a police station in the Moscow suburb of Mytishchi on April 21, 2017.

The migrant workers complain, but to little effect. In 2016, Valentina Chupik filed 6,232 complaints with various police internal affairs departments in Moscow and Moscow Region, but only four of them were passed up the command chain for further review. Meanwhile, the system for expelling migrants on the basis of police complaints operates without fail. In 2016 (there is no data for 2017), Moscow courts expelled over 14,000 migrant workers from Russia for living somewhere other than their registered domicile. They expelled almost 12,000 migrant workers for being in public without their papers on them.

“The main problem is the right the police have accorded themselves to check the papers of migrant workers for any reason,” says Chupik.

“Yes, they do have this obligation, but only when a migrant worker is involved in a criminal case,” she says.

According the Interior Ministry’s latest orders, even a neighborhood police inspector can check someone’s immigration status. He can write the person up for a nonexistent violation, which is immediately entered into a special data base. Two violations are sufficient cause for deportation from hospitable Russia, explains Chupik.

Curiously, at the same time, migrant workers are far from the most dangerous social group in Russia, formally speaking. Moreover, the number of crimes committed by migrant workers has been steadily declining, which has been noted even by the Russian Prosecutor General’s Office. As reported by Kommersant, according to the Prosecutor General, foreign nationals and stateless persons committed 41,047 crimes in Russia in 2017, which was 6.6% fewer than in 2016. In November of last year, Interior Minister Vladimir Kolokoltsev mentioned an even earlier nine-percent drop in crimes committed by migrant workers when presenting the new immigration policy. But what the top brass has said is not digested fully and immediately by rank-and-file police officers.

Commentary
Valentina Chupik, head of Tong Jahoni
State agencies and the police do not hate migrant workers because they are so despicable. The authorities pretend to hate them so it is less shameful when they rob them for their own profit. When you talk to on-duty cops, they claim eighty percent of crimes are committed by migrant workers. When you ask them to go to the Interior Ministry’s own website and take a gander at the stats, they switch to saying most crimes are committed by North Caucasians. Then they say, “Well, it’s just our policy.” When you tell them they should not implement a criminal policy because they are law enforcement officers, they get it. But they complain they have arrest quotas to fill. 

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Muhiddin, a janitor. Photo by Vlad Dokshin. See Muhiddin’s story in Novaya Gazeta′s special project Muscovites

Xenophobia Has Momentum
On January 12, the body of 41-year-old Tahirjan Hamrayev was found in Noginsk, Moscow Region. Hamrayev had been stabbed over twenty times. Hamrayev left Kyrgyzstan as a migrant worker in May 2017 and got a job on the construction site of a multi-storey residential building. As reported by Kyrgyzstani media, the dead man’s mother, Hairins Hamrayeva, said her son was supposed to have come home for the New Year’s holidays, but decided to stay in Noginsk since his employers, impressed by his work, had offered him extra jobs. On the fateful day, Hamrayev went into a shop and fell into the hands of at least ten neo-Nazis, local law enforcement official claim, citing an eyewitness’s testimony.

In the various ultra-right groups on social media where the incident is discussed, commentators occasionally write languidly that Hamrayev got what was coming to him. Generally, after the security services were pressured by the Kremlin into mopping up the sector, nationalism and neo-Nazism have died out as phenomena [sic], and nowadays assaults on migrant workers have gradually become something out of the ordinary,although in Petersburg on January 31, for example, a Tajikistani national was attacked with a knife in the subway.

No one, however, has abolished xenophobia, which, although it has displayed a downward trend [sic], is still firmly entrenched in the minds of Russians.

In early 2017, Tong Jahoni published the findings of a study on nearly 50,000 housing rental ads in Russian media. Only one out of every twelve ads was free of xenophobic  insinuations. Most of the people who placed the ads wanted to rent their flats or rooms to “Russian citizens” (50%), “Slavs” (28%), and “ethnic Russians” (7%). The picture presented by help wanted ads was even more distressing. Only one in twenty ads among the 20,000 vacancies examined did not contain xenophobic allusions. Fifty-six percent of employers were seeking “Slavs” to fill the jobs, while 35% were eager to see “Russian citizens” in the positions.

Human rights activists say the situation is typical, and no one wants to change it for the most part. In turn, the media fuel the fire. In 2016, there were approximately 120,000 news reports involving migrant workers. News search websites focused mostly on crime reports, which constituted nearly 98,000 of the news reports filed.

However, the attitude to migrant workers on the part of the rank-and-file population is often quite neutral when they encounter each other face to face. Moreover, human rights activists can cite instances in which the police have helped migrant workers. But in terms of society at large, although xenophobia decreased by 10% last year, according to the official estimates produced by the Russian Federal Public Chamber, it still remains a serious problem. According to pollsters VTsIOM [sic], two thirds of the people they surveyed believed migrant workers took jobs away from Russian citizens.

Commentary
Alexander Verkhovsky, director, Sova Center for Information and Analysis 
There is xenophobia as a mass phenomenon: people’s attitudes and emotions. In this case, we can track changes through public opinon polls [sic]. I am quite glad that there is a growing number of people who, when asked about the feelings they have towards migrant workers (e.g., fear, apprehension, hatred, love), respond that they feel nothing, that they could not care less. The perfect relationship is precisely this, when people do not see a group as something that provokes emotions. They are just other people.

There is xenophobia as discrimination, when seeking employment, for example. Unfortunately, practical discrimination has been underresearched. What matters most is that people do not even perceive some forms of it as discrimination. For example, people are not ashamed to write in an ad that they will rent a flat only to a Slavic family. It is useless to fight this. It is a matter of the social atmosphere [sic].

Finally, the most aggressive form of xenophobia is physical violence. In recent years, the figures have been steadily declining. Just the other day, Sova Center published a new report based on the figures for last year. I would note there is not necessarily a meaningful connection with the decline of popular xenophobia, because assaults are not committed by the masses, but by ideologically motivated young people, who might have completely different opinions from the masses. This is more likely the consequence of a depression amongst radically minded young people. They are scared. They don’t really want to commit assaults [sic]. In the previous decade, they did not know the fear of God at all, as the saying goes, but then Center “E” [Russia’s “anti-extremism” police, established from disbanded anti-organized crime squads during Dmitry Medvedev’s presidency] went after them. Many street fighters went to prison, and this changed the situation.

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Shirinsho “Handsome” Vohidov, from Tajikistan. Photo by Anna Artemieva. See Shirinsho’s story in Novaya Gazeta′s special project Muscovites

Medical Disenfranchisement
When migrant workers take ill in Russia, it is no simple matter for them to recover.

“To enroll at a district outpatient clinic, you need to have a temporary residence permit or residence permit, permanent registration,” says Daniil Kashnitsky, a junior researcher at the Higher School of Economics. “However, a poor command of information and the Russian language, as well as a lack of legal knowledge, means that when migrant workers are yelled at by employees at the intake desk, they leave and do not come back. There are many such instances.”

There is the option of going to a private clinic, but sometimes only a state clinic can help, for example, when tuberculosis is diagnosed. It can help, but it is not obliged.

“Tuberculosis has a dangerous phase when it is communicable through airborne droplets. Patients must be hospitalized during this phase. They should stay in hospital until the tuberculosis bacterium goes away, and they are no longer a danger to others. This usually takes two or three months,” explains Kashnitsky.

If migrant workers are hospitalized due to an accident, the treatment is free, of course, but the attitude towards them will be correspondingly shabby. Last year, when a busload of migrant workers was hit by a train near Vladimir, killing seventeen people, the local hospitals treated several severely injured people.

“I asked that an injured child be sent to Moscow. Two days later, he died in our regional hospital. I remember the child. He was a year and a half old, from an Uzbek family. I said, ‘Why did you send him to our hospital? Call a helicopter and take him to Moscow: he’ll get better help there.’ I was told the decision had been made by the health department,” recounts Alla Boyarova, director of an employment agency for migrant workers. On the morning of the tragedy, her husband had rushed to help the affected immigrants.

Zoyir Karimov, Boyarova’s husband, is deputy chair of the Tajik diaspora in Vladimir. He recalls that the adult victims had huge problems.

“Two of them did not make full recoveries in hospital. They were not operated on and were sent back in this shape to Uzbekistan. They were told they could buy special plates, but they had no money. One broke his shoulder, the other, his leg,” says Karimov.

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Infographic No. 1: Sources of corruption in the migrant labor sector, 2017, per information gathered by the human rights organization Tong Jahoni. Police — 1,814 incidents (86.3%); immigration centers — 196 incidents (9.3%); migration service — 53 incidents (2.5%); other state agencies — 29 incidents (1.4%); other organizations — 11 incidents (0.5%). Infographic No. 2: Forms of corruption in the migrant labor sector, 2017, according to the human rights organization Tong Jahoni. “Verification” of registration status — 5,304 incidents (78.3%); arbitrary interpretation of the law — 896 incidents (13.1%); threats by police to file trumped-up administrative charges — 340 incidents (5.0%); high-pressure selling of unnecessary “services” — 196 incidents (3.0%); forcing migrant workers to use a particular middleman when filing papers — 41 incidents (0.6%). Infographics courtesy of Veronika Tsotsko and Novaya Gazeta

Blockchain to the Rescue
It is tempting to dub what is happening in the Russian migrant labor sector a mess. In fact, however, it is more likely a restructuring of the system after the Federal Migration Service (FMS) was incorporated into the Interior Ministry in 2016. The relationship with migrant workers has changed because what the Interior Ministry does most of all is punish people. Many of the organizations that dealt with drawing up papers for migrant workers have been turned into limited liability companies, meaning it has become nearly impossible to monitor their policies, and human rights activists have huge gripes with the new state-run immigration centers. New law bills that have been tabled will only aggravate the circumstances, reducing migrant workers to semi-slave status in Russia.

The question is simple: what to do? At a January 29 meeting of human rights activists to discuss the issue of immigration (a meeting not attended by diaspora leaders) various proposals were voiced. Vladimir Khomyakov, co-chair of the grassroots movement People’s Assembly (Narodnyi Sobor), made the most radical and regressive proposal at the round table.

“We need the strictest possible oversight of each person’s stay in Russia, not just this buying a work permit and hanging out wherever you want,” said Khomyakov. “We need a system of mutual obligations. We need a single government agency that would deal with immigration and use a single database.”

People who intend to travel to Russia should obtain all the papers they need at Russian consulates in their own countries, and each migrant worker should be assigned an ID number under which all information about him or her would stored, argued Khomyakov.

Totalitarian oversight in return for peace and quiet.

But Khomyakov’s idea was not met with unanimous approval by round table participants, just like the proposal, made Vyacheslav Postavnin, former deputy head of the FMS and president of the 21st Century Immigration Foundation [sic], to move immigration registration online or, at least, make it obligatory for immigrants to check in with the migration service by telephone. Some human rights activists were outraged by the fact this would make it easier for terrorists to hide [sic].

“Terrorists never violate immigration laws. Terrorist acts are complicated operations. What, they are going to put themselves at risk of being stopped by police for failing to reregister on time?” Postavnin countered crossly.

He was told that hackers could erase or damage the entiere online database, to which the former deputy head of the FMS showed off his knowledge of the word “blockchain.”

“Even if you wanted to, you couldn’t erase it,” he said.

Tatyana Dmitrieva, deputy head of the Department for Coordinating Local Immigration Offices and Accountable Forms in the Immigration Directorate of the Russian Interior Ministry’s Moscow Office, did not like any of these proposals. She only remarked that the ministry wholly supported a new law bill that would punish legal entities for providing fictitious registration, and that a consensua had to be reached with regard to thorny issues.

The discussion’s moderator, Fyodor Dragoi, chair of the Committee for Safety, Public Diplomacy and Public Oversight at the Council for Ethnic Affairs in the Moscow City Govermnent, suggested drawing up a list of proposals after the discusssion, since “this tumor [could] burst any minute,” and the problem had to be solved.

Another, autonomous proposal has been made by the Center for Strategic Research (CSR), which has published its report on immigration. Recognizing a decline in migration flows from the CIS countries in recent years—2017 saw an increase the numbers of migrant workers from many countries, but the numbers have not returned to pre-crisis levels—the report’s authors propose their own measures for maintaining a migration flow of 250,000 people to 300,000 people annually, which they claim is a necessary number for modern Russia. In particular, they propose introducing something like a green card for highly qualified immigrants in order to stimulate the influx, as well as work cards that would make it easier to obtain a residence permit.

Something has to be done, since Russia will have lost thirteen million able-bodied people by 2030, but internal resources for population growth have been exhausted.

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Viorel, a Moldovan, on a lunchbreak with his workmates. Photo by Viktoria Odissonova. See Viorel’s story in Novaya Gazeta′s special project Muscovites

The problem is that there are not unlimited numbers of highly qualified immigrants, and the ones there are drift in other directions. To take one example, the number of migrant workers from Moldova has decreased over the last two years by more than one and a half times, from 250,000 to 157,000. They have begun looking towards the European Union.  The number of migrant workers from the Eurasian Union has been growing, but their numbers are also limited, especially because Kazakhstani workers, for example, are needed in Kazakhstan itself, a country that, due to geographical proximity, grabs Kyrgyzstani workers away from Russia. The number of immigrants from Tajikistan have been growing steadily. On the other hand, while the number of Uzbekistanis coming to Moscow has grown over the past year, to a million and a half registered nationals, it would seem the numbers will eventually decline, since more convenient job markets have opened up to them.

“Turkey and the Emirates are currently very interesting and attractive to migrant workers from Asia,” says attorney Yulduz Ataniyazova. “The economy there is civilized, and there is a niche in the economy for unskilled workers. At the same time, the workers are provided with normal working conditions. For example, I know that in the Emirates migrant workers who clean houses and work in restaurants note that the cleaning liquids there are less harsh [sic]. This has now become important to them.”

However, the wages there are less than in Moscow, generally, but it depends on how you look at it.

“Uzbeks start doing the maths, and it turns out that here they will pay out more in bribes, whereas in Turkey a policeman would never approach them for no reason at all,” explains Chupik.

Workers from the CIS will keep coming to Russia for some time, of course. But if Russia toughens the rules for migrant workers, even the most desperate adventurers from the CIS countries will prefer, in time, to go somewhere else, to a place where they can work without risking their lives, health, and human dignity, not to mention their wallets.

Translated by the Russian Reader

NB. Perhaps I should have a three [sic]s and you’re out rule on this website, but despite the number of dubious or simply odd claims made by the article’s authors and the experts they quote, I thought there was enough important information and nontrivial viewpoints in the article to make it worth my while to translate and your while to read.

However, on one point—the claim that nationalists and neo-Nazis have come to naught in Russia, and hence the number of assaults on migrant workers has precipitously decreased—I was so bothered I turned to my friend W., a person who has been involved with immigrant rights in Russia both professionally and personally for many years. Here is their response.

“They are engaging in wishful thinking. Nationalism and neo-Nazism have not gone away. It has become very difficult to keep track of attacks. Officially, such reports are not welcome and are rarely discussed in the media. This is the current trend. None of this exists anymore in Russia, allegedly, while in Ukraine, for example, there has been a serious increase in anti-Semitism. According to the official interpretation, there is almost no anti-Semitism in Russia, although there were several egregious incidents in January. Basically, nobody cares about this business, and Jewish organizations mainly smooth over the potentially negative consequences of vociferous discussions.” 

I should also point out the folly of relying on public opinion polling data in an authoritarian country like Russia, where respondents can be expected to give what they think is the “right” answer out of a fear bred into the society in Soviet times.

Nevertheless, in the absence of free elections and other real political freedoms, the Putin years have been a boom time for the country’s main pollsters, VTsIOM (mentioned in this article), FOM, and the supposedly independent Levada Center. They have polled away with merry abandon, and Russian and international journalists, many of them too lazy or lacking the time to do real reporting, have become increasingly dependent on the utterly falsified portrait of “average Russians” the country’s troika of loyalist pollsters has been painting over the last eighteen years. I have dubbed the phenomenon “pollocracy” and discussed it many times on this website. TRR

Annals of Import Substitution: Got Milk?

Perhaps one of the big reasons the post-embargo Russian dairy industry has failed to achieve “total important substitution,” not mentioned in the otherwise comprehensive article, below, has been its penchant for gulling Russian consumers. Among the gullible is your correspondent, who was moved by the label on this milk carton (“Honest Natural Cow Milk […] from an Ecologically Pure District of Bashkiria”) to buy it the other day. My boon companion, however, immediately pointed out what the side of the carton revealed. In this case, “Honest Bashkir Natural Cow Milk” was actually reconstituted milk powder (“изготовлено из молока нормализованного”), not real milk. Since the embargo set in, every Russian has also encountered literally tons of fake cheese in the shops. Chockablock with palm oil, not milk, and sporting European sounding monikers to make them more attractive to “discerning consumers,” this fake cheese has generated massive popular distrust in domestically produced cheese and other dairy products. TRR

Why Import Substitution Has Failed in the Dairy Industry 
Despite the Produce Embargo, Milk Production Has Declined, Dairy Products Have Become More Expensive, and Demand Has Fallen
Yekaterina Burlakova
Vedomosti
January 22, 2018

“I’ve seen it myself, touched it with my own hands. The country is currently constructing three cheese factories with the capacity to produce fifty, sixty, and seventy tons daily, and in five years we will have forgotten the problem [the shortage of domestically produced cheese] altogether!” Russian agriculture minister Alexander Tkachov said recently, sharing his optimistic plans. “Let’s recall pork, vegetable oil, sugar, vegetables, and fruit. We also imported all this produce. We were seriously dependent.”

Tkachov and his colleagues never tire of talking of how the produce embargo, imposed by Russia in August 2014 on the United States, the EU, Norway, Canada, and Australia, has helped Russian farmers. Greenhouses have been built, orchards have been planted, and so on.

But import substitution has not taken hold in the dairy industry. Milk production has declined, dairy products have become more expensive, and demand for them has fallen off. Why has this happened?

Russia provides itself with only 75% of the dairy products it consumes; the rest is imported, mainly from Belaruas. However, Russia has always suffered shortages of domestically produced raw milk. But the circumstances have worsened. According to Soyuzmoloko, the Russian national dairy producers union, the production of raw milk decreased by two percent to 30.7 million tons between 2006 and 2016.

It is a complex and costly business, says a spokesperson for a dairy company. Vegetable production shows a profit after seven or eight years; fruit production, after four or five. Dairy plants take much longer to show a profit. According to different estimates, it takes between ten and fifteen years to put them in the black. Many potential investors are scared off by such figures, but our source said what the dairy industry needed were serious, long-term investments.

Indeed, the dairy business is considered complicated due to the long time it takes to see a return on investment, says Stefan Duerr, director general of EkoNiva, Russia’s largest milk producer. It generally takes three years to build a dairy plant and put it on line. Dairy production also requires considerable working capital: cows give milk only from the age of three. You have to prepare you own feed, and for that you need land: an average of about three hectares per cow, says Duerr. Pig breeders and poultry farmers have it much easier, since they can buy readymade feed.

Over the past four years, the price of raw milk has increased by about 60% to 25 rubles per kilo, says Artyom Belov, director general of Soyuzmoloko. This occurred after the ruble declined, and demand from processors increased. Yet the net price of milk has decreased after the ruble’s recovery. Belov is certain this makes dairy farming more attractive to investors. In his opinion, state support is also vital. In 2017, compensation of capital expenditures grew from 20% to 30%, while soft loans have been granted at an interest rate of up to 5%.

Investors Have Doubts
Investors still have doubts, however, For example, Rusagro’s principle owner Vadim Moshkovich recently announced he was willing to invest one billion dollars in milk and dairy production. But a decision on the project has not yet been made, says a spokesperson for the agricultural holding company.

“Dairy cow breeding really is a complicated business with a long-term return on investment, even taking subsidies into account. However much we cite the discounted return on investment model, seven years, which is mentioned in the press, we just cannot pull it off in Russia,” he says, raising his hands in dismay.

The processing and production of value-added products is needed to make the project viable. Total vertical integration—from feed production to the manufacturing of dairy products—is thus necessary, he argues.

Other investors have also spoken of possible investments in mega projects. Alexei Bogachov, a minority shareholder in the Magnit grocery store chain, has promised to invest 20 million rubles in a partnership with Rusagro. Miratorg has promised to invest $400 million, while Thailand’s Charoen Pokphand Group has promised to invest one billion dollars. In reality, only Vietnam’s TH Group has launched new, large-scale raw milk production facilities. Last year, the company began construction on dairy farms in Kaluga Region and Moscow Region that will accommodate approximately 40,000 head of dairy cows, and it recently announced plans to build farms in the Maritime Territory. It intends to invest $2.7 billion over the next ten years.

If circumstances on the market do not change, and milk prices do not go down, Belov forecasts it will be possible fully satisfy Russia’s milk needs in ten years. For the time being, processers deal with the milk shortage in different ways. For example, Oleg Sirota, founder of the cheese company Russian Parmesan, will soon bring his own dairy farm on line.  In turn, in order to insure stable supplies of milk, the French company Danone has invested in milk production in Tyumen Region in partnership with Naum Babayev’s Damate Group. The cost of the entire project is 5.6 billion rubles, but Danone’s share of the costs has not been disclosed. According to the agreement between Danone and Damate, all the milk produced at the facility will be sent to the Danone plant for eight years.

The Embargo’s Impact
“We saw that European producers with much lower prices would not arrive the next day, and we realized we could make long-term plans, that we had to invest in domestic production,” said Alexei Martynenko, owner of Umalat, a company that produces brined cheeses.

Almost as soon as the embargo was imposed, Martynenko gave up the day-to-day management of a feed production business and set about vigorously developing Umalat.

“I realized that if I didn’t change anything right away, we would sleep through the chance to grow the company,” he noted.

Many businessmen decided to tackle cheese immediately after imposition of the embargo, which among other things banned the import of cheese from the European Union to Russia. In 2016, according to Nielsen, Umalat was Russia’s leading manufacturer of sulguni, and took third place in the manufacture of mozarella and mascarpone. Since 2014, production at Umalat has doubled to 5,000 tons annually, says Rustem Mustafin, the company’s marketing director.

“The import substitution program and imposition of the embargo came in handy. We would have grown without them, but the growth would probably have been less considerable,” Mustafin continues.

However, the embargo’s impact wore off quite quickly, since it was immediately followed by a substantial downturn in household incomes, he stresses.

Sirota launched cheese production in the summer of 2015. Currrently, he produces semi-solid and hard cheeses, which retail for 800 rubles to 1,600 rubles per kilo. His cheesery’s first batch of parmesan will mature in August, when the embargo will celebrate its fourth anniversary. Currently, Sirota produces 400 kilograms per day. In 2018, he plans to ratchet production up to two tons per day.

Russian manufacturers have been most successful in producing hard and semi-hard varieties such as Russian, Dutch, and Altai, says Andrei Golubkov, a spokesman for Abzuk Vkusa [ABC of Taste], a Russian gourmet grocery store chain. There are also high-quality producers of brie, camambert, mozarella, and burrata. But the supply of good-quality ripened hard cheeses is still limited. The chain now mainly sells hard cheeses from Switzerland, which was not included in the embargo, and the South American countries, says Golubkov. Expensive Russian cheeses account for about 10% of all sales in terms of money and about 5% in terms of volume, Soyuzmoloko’s Belov says.

If the embargo is lifted, many businessmen involved in the manufacture of milk and cheese will be ruined, argues Sirota.

“Even if we could compete in terms of quality, we could not compete in terms of cost. The price of milk in Germany is currently around 20 rubles [per kilo], while it is 34 rubles in Russia,” says Sirota. [According to the industry website clal.it, the price of raw milk in Germany in November 2017 was 38.97 euros per 100 kilograms or approximately 27 rubles per kilo—TRR.]

Milk in Germany costs less due to cheap loans and government subsidies. In Russia, on the contrary, loans are short-term and expensive: they fall due between five and seven years. Investors have not yet managed to launch production, but the money has to be returned. There is always a shortage of good-quality milk for reprocessing. It takes 14 kilos of milk to make one kilo of cheese. Moreover, the highest grade of milk is required to ensure the desired quality of cheese.

Mustafin says Umalat is not afraid the sanctions will be lifted, however. The company has been vigorously promoting its brands, has found its customers, and has produceed cheeses that are better than their imported counterparts.

From Milk to Macaroni
Meanwhile, the consumption of dairy products has decreased by 5% from September 2016 to September 2017, according to Nielsen. Sales of kefir experienced the largest drop: 8.4%. Sales of sterilized milk fell by 7%, yogurt, by 5.8%, and cottage cheese, by 5%. For the first time in recent years, there has been a drop in the consumption of such traditional Russian dairy products as milk, smetana (sour cream), tvorog (cottage cheese), tvorozhki (quark), and ryazhenka (fermented baked milk), notes Anastasia Jafarova, director of customer relations in the department of sales and servicing of consumer panels at GfK Rus, a market research company. Perhaps the main reason is an increase in the average price by 10.4%, explains Jafarova. Price rises have mainly been due to the price rise of the raw material, i.e., the milk supplied by farmers, says a spokesperson at PepsiCo. In addition, a spokesperson for Danone cites other causes. Under the Plato road tolls system, the tolls imposed on heavy cargo vehicles rose by 25% in April 2017, and excise taxes on fuels rose by more than 8%. The decreased demand for dairy products has also been due to a decline in household incomes over the past few years, argues Belov.

The fact that people have started to skimp even on ordinary milk says they are likely to switch to cheaper products, notes Marina Balabanova, Danone’s regional vice-president for corporate relations in Russia and the CIS. This could be macaroni, cereals or other products, she speculates. As never before, Russians are rational in their spending and try to redistribute their expenses as efficiently as possible, says Jafarova. This testifies to the relative adapation to a protracted crisis on the part of Russians.

Agricultural minister Tkachov has also admitted that import substitution has not occurred in the dairy industry. He wrote about it in response to an official query from Communist Party MP Valery Rashkin. Although imports have dropped by 1.9 million tons since 2013, the production of milk has grown only by 1.4 million tons. The minister wrote that the demand for imported dairy products was currently 7.5 million tons. At a production growth rate of three percent annually, total import substitution would take at least nine to ten years. But work is currently underway to increase state support, which would reduce this period to five to six years, Tkachov hopes.

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“How the Consumption of Dairy Products Has Fallen (from June 2016 to June 2017, in percentages). Cheese spread and smoked cheese: –6. Quark: –5. Milk: –4. Yogurt drinks:–4. Firm yogurt: –4. Sour cream: –2. Cottage cheese: –2. Source: GfK Russia.” Infographic courtesy of Vedomosti

We Consume Too Little
A person needs to eat at least three dairy products per day. Eighty percent of the daily recommended intake of calcium is thus supplied. According to Soyuzmoloko, calcium is absorbed most easily this way. Their argument is backed up by the Federal Nutrition and Biotechnology Research Center and the Russian Osteoporosis Association. The Russian Health Ministry recommends individuals consume at least 325 kilos of dairy products annually. But we are far from achieving these norms: individual annual consumption of dairy products was 233 kilos in 2016. However, a top executive at a Russian agricultural holding company argues these claims are a bluff. In Soviet times, there were meat shortages, so dairy products were consumed as the primary source of protein. Circumstances have now changed. Russia now produces enough of its own poultry and pork at affordable prices. So there is simply no longer the need to eat so many dairy products, he explains.

Translated by the Russian Reader

UPDATE!

Up to 25% of Cheese in Russia Is Fake, Smuggled From Ukraine — Watchdog
Moscow Times
January 25, 2018

Up to a quarter of ‘cheese products’ sold in Russia were produced in Ukraine, circumventing Moscow’s embargo on food imports, according to Russia’s state agricultural watchdog.

Russia placed restrictions on food imports, including dairy, from countries that enacted sanctions against Moscow after its annexation of Crimea from Ukraine in 2014. The embargo has been a boon for domestic Russian producers, but consumers have complained about a proliferation of “fake cheese” — dairy products made with milk-substitutes.

Up to 300,000 tonnes of Ukrainian cheese products are entering Russia every year after being repackaged in Belarus, Russia’s agricultural watchdog Rosselkhoznadzor spokeswoman Yulia Melano told the RBC business portal Tuesday.

“In all likelihood, we’re talking about the legalization of Ukrainian cheese or protein and fat products through Belarus,” reads a letter written by Rosselkhoznadzor head Sergei Dankvert that was obtained by RBC.

The Ukrainian ‘cheese products’ mostly consist of vegetable oils, rather than dairy, and are imported via Belarus under the guise of Macedonian or Iranian cheese, according to the letter.

Cheese-like products could account for more than half of all cheeses sold in Russia, Andrei Karpov, the executive director of the Association of Retail Trade Companies (AKORT), was cited as saying by RBC.

Rosselkhoznadzor does not yet regulate cheese products, which are made almost entirely out of milk substitutes, and does not officially track its imports.

Thanks to Mark Teeter for the heads-up

Uzbekistan: Living below the Poverty Line

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Per capita gross income by region in the Republic of Uzbekistan, January–December 2017 (in thousands of Uzbekistani soms). Screenshot of a page on the website of the State Statistics Committee of Uzbekistan

Ferghana.Ru
Facebook
January 15, 2018

Uzbekistan: The Majority of the Populace Lives Below the Poverty Line

Let us take a closer look at the figures.

In 2017, the total income of Uzbekistanis was 186.2 trillion soms ($22.877 billion) or 5.8 million soms ($712.60) per capita, as reported by State Statistics Committee of Uzbekistan.

5.8 million soms ($712.6) annually translates into 15,900 soms ($1.95) a day. Per the UN’s standards, people who live on $1.90 a day or less are deemed to be living below the poverty line. Currently, approximately 760 million people worldwide live on such incomes. Whether inhabitants of Uzbekistan have been included in their ranks is not specified.

Meanwhile, according to the republic’s State Statistics Committee, a large part of the country—eight of the twelve regions and Karakalpakstan—lives below the international poverty line. The situation is the worst in Karakalkapstan (where the per capita gross income was 4.129 million soms, i.e., $507.30 annually or $1.38 daily), Jizzakh Region (4.216 million soms, i.e., $518 annually or $1.40 daily) and Namagan Region (4.284 million soms, i.e., $526 annually or $1.44 daily).

Life is best in the city of Tashkent, where the average per capita income was 12.7 million soms (i.e., $1,560 annually or $4.27 daily), Navoiy Region (9.1 million soms, i.e., $1,118 annually or $3.06 a day), and Bukhara Region (6.744 million soms, i.e., $828.60 annually or $2.27 daily).

At the same time, the State Statistics Committee has noted an 10.3% increase in the population’s total income compared to 2016. This indicator grew the most in Khorezm Region (16.8%), Andijan Region (14.7%), and Surkhandarya Region (14.5%). It grew the least in Syrdarya Region (4.5%), Navoiy Region (5.1%), and Tashkent Region (6.6%).

The population’s total incomes includes cash incomes and incomes in kind, and consists of revenues that are repetitive in nature: salaries, pensions, fees, income from self-employment, income from property, and so on.

As of December 1, 2017, the minimum monthly wage is 172,240 soms ($21.10).

Thanks to Sergey Abashin for the heads-up. Translated by the Russian Reader. Ferghana News is a leading source of news about Central Asia, and publishes in Russian, Uzbek, and English.

We Will Stop at Nothing to Make Sure You Have Fun

fullsizeoutput_976A migrant maintenance worker fixes a rooftop on Kolomenskaya Street in downtown Petersburg, September 25, 2017. Photo by the Russian Reader

Immigrant Janitors to Be Evicted from Tenement Houses for World Cup
Maria Tirskaya
Delovoi Peterburg
January 15, 2018

The scandal caused by plans to evict students from dormitories in order to house the Russian National Guardsmen and policemen who will provide security at this summer’s World Cup matches in Petersburg has taken an unexpected turn. Accommodations for the law enforcement officers have now been found in city-owned tenement houses.

In November 2017, it transpired that the Russian Federal Education and Science Ministry and the Russia 2018 World Cup Organizing Committee had recommended to major universities in several cities where matches would take place to evict out-of-town students from their dormitories before the football tournament kicked off. The plan was the rooms thus freed would house the regular policemen and Russian National Guardsmen who would be policing the sporting events. To this end, universities in Nizhny Novgorod, Samara, Saransk, and Yekaterinburg were forced to amend their curricula and examination timetables so students would be able to take their exams and clear out of their dormitories before the World Cup began. A scandal ensued. The Russian Student Union asked Prime Minister Dmitry Medvedev to prevent the forcible eviction of students.

Petersburg officials have come up with another way to find temporary housing for police and the Russian National Guard during the World Cup.

The city’s Housing Committee has drafted a municipal government decree that would provide housing to “legal entities performing tasks related to the provision of enhanced security measures during the 2018 FIFA World Cup in Petersburg” in commercial housing stock under lease agreements. The draft decree has been published on the Housing Committee’s website.

In other words, the Housing Committee plans to house law enforcement officers in tenement houses owned by the city.  The first tenement house designed to accommodate out-of-town janitorial and maintenance workers was opened in 2010. Currently, the city’s State Housing Fund owns seventeen tenement houses, which are located both in the city’s central and outlying districts. The cost of renting a single bend in these houses ranges from 2,900 rubles [approx. 42 euros] to 4,600 rubles [approx. 66 euros] a month. We can assume the most popular spots will be in the tenement house at 22 Karpovka Embankment on the Petrograd Side, since it is located closest to the stadium on Krestovsky Island, where all World Cup matches hosted by Petersburg are schedule to be played.

The Housing Committee declined to comment on its undertaking.

Earlier, it was reported most of the events relating to the 2018 World Cup would be policed by Russian National Guard units. They would be responsible for the personal safety of players, coaches, and referees, and monitoring stadiums, fan zones, training pitches, and areas around the stadiums, including the transport infrastructure sites that will handle the movement of fans.

In 2017, during the FIFA Confederations Cup, which took place from May 26 to July 2, and was considered a rehearsal for the World Cup, security in Petersburg was ensured by over 15,500 officers and servicemen from units of the Russian National Guard’s Northwestern District.

The World Cup will take place in Russia from June 14 to July 15 of this year. The matches will be played in Moscow, Petersburg, Yekaterinburg, Sochi, Samara, Nizhny Novgorod, Kaliningrad, Volgograd, Kazan, Rostov, and Saransk.

Translated by the Russian Reader

Migrant Workers Clash with Russian National Guard in Tomsk

migration centerImmigration Center in Tomsk. Photo courtesy of tv2.today and segodnya.ua

“Inhumane, Wrong, but Nothing Can Be Done”: Migrant Workers on Clashes with the Russian National Guard in Tomsk
Roman Chertovskikh
Takie Dela
January 11, 2018

The Russian National Guard dispersed a crowd of migrant workers in Tomsk on January 9. Over 2,000 foreigners had paralyzed the work of the immigration center and refused to leave, after which security forces used cattle prods and batons against them. Why did it happen?

In 2018, Tomsk Region has received a quota of only a thousand temporary residence permits. Yet the permit is issued only once annually, setting off a brouhaha among foreigners. The queue for those applying for the permit formed on January 2. Eight hundred people were on the list, and they checked in every day. On the day the permits were to be issued, a huge crowd had gathered at the entrance to the immigration center, located on the Irkutsk Highway, by six in the morning. The queue included students at Tomsk universities and workers alike.

The immigration center opened at nine, but work ground to a halt at eleven-thirty. Having serviced only three hundred people, the center’s employees stopped seeing any more clients and declared an emergency. The Russian National Guardsmen and OMON riot cops who arrived at the scene pushed the foreigners back and blocked the entrance to the building.

“Riot Cops Disperse Mob of Migrant Workers in Tomsk with Cattle Prods.” Video published on YouTube, January 8, 2018 [sic], by vtomske

One Center Instead of Numerous Local Federal Migration Service Offices
Most of migrant workers consider policy makers in the presidential administration responsible for the incident. Whereas last year foreigners were served by various local offices of the Federal Migration Service (FMS), as of this year all of Tomsk Region [the sixteenth largest region in Russia, although not all of its land mass is habitable—TRR] is served by one center.

“Since the ninth [of January] I have been busy running round to various government offices, trying to find someone who could help me and other students. I have so far struck out. I have been trying to get a temporary residence permit for four years running. I always encountered queues and crowding, but this was the first time I witnessed such a nightmare,” says Günel, a Kazakhstani citizen and second-year grad student at Tomsk State University.

According to Günel, it is wrong to issue a thousand permits at the same time on the same day, although the young woman is not eager to condemn the actions of the police.

“I cannot say anything bad about the Russian National Guard and OMON riot police acted. They were doing their jobs, after all. I saw the cattle prods, and I saw them being used, but I did not notice the police beating anyone up, as has been written about a lot in the media instead of analyzing the causes of the situation. I was not in the crowd. To break through to the front door, you would have had to stop at nothing, pushing women and old men aside. It’s also hard to blame the people who generated the crush. They had been waiting for their permits for a year, and some of them had waited longer. There were young students in the queue, and ethnic Russians who had decided to return to their historic homeland. There were also a lot of people from other countries who need a temporary residence permit to avoid paying for a work permit every month. Basically, they could not care less about citizenship.”

Günel argues that a thousand temporary resident permits is much too few for Tomsk, so permits are obtained through personal connections from year to year. She does not believe it is possible to issue a thousand permits in two hours.

Unjustifiably Small Quotas
Seil, a Tomsk State University anthropology grad student from Kyrgyzstan and employee of the company Immigrant Service, argues the clashes were the consequence of administrative errors caused by the peculiarities of the quotas. Temporary residence permits are issued only in keeping with the demands of the labor market. If Tomsk Region needs a thousand foreign workers, it does not matter how many people come to the region over and above the thousand-person quota, and how many of these people are university students.

According to Seil, numerous immigrants, in fact, work in the city of Tomsk and Tomsk Region illegally, without a legal permit.

“Then why, I wonder, are we talking about the need for foreign labor and setting quotas on the number of laborers at the same time? Everyone knows the actual circumstances are extremely different from the circumstances on paper, but no one tries to change the status quo,” Seil says, outraged. “Unfortunately, we have to follow the regulations. It is inhumane, wrong, and ugly, but if 1,001 people come and apply for temporary residence permits when the quota is 1,000, nothing can be done for the ‘superfluous’ person.”

Seil argues it is not profitable for Russian state agencies to issue temporary residence permits, but those who have work permits are forced to pay 3,500 rubles [approx. 50 euros] a month in Tomsk Region.

“It is unprofitable, of course, for the state to lose this source of revenue. Tomsk Region makes several million [rubles?] a year from the tax on the work permit alone,” says Seil. “I’m certain that if the quotas were set so the numbers reflected the circumstances in the region, there would not be a huge difference between supply and demand, and emergencies would be prevented. Something similar happened last year. People nearly broke the door down, there was such a brouhaha.”

Seil condemns the actions taken by employees of the immigration center.

“Maybe an emergency really did occur, but why was it necessary to close the doors at 11:30 a.m.? They could have tried to resolve the difficulties. Employees at such institutions like to boast that if closing time is 6 p.m., they won’t work a minute later than 6 p.m. Sure, they wear uniforms [i.e., because the FMS was dissolved, and a new immigration entity was established within the Interior Ministry, that is, within the Russian national police force—TRR], but why treat people that way? They could have worked at least another ninety minutes, until lunch time, in order to take the situation down a notch.”

Quotas have been reduced nationwide in 2018, not only in Tomsk Region. In November 2017, the Russian government approved a quota that provided for only 90,360 temporary residence permits, which was 19,800 fewer permits than were allowed the previous year. In 2016, however, the quota was 125,900 temporary residence permits, and in 2017 it was 110,160.

According to a prognosis by Rosstat, Russia’s able-bodied population will have decreased by seven million people by 2025. A reduction like this cannot be compensated only by increasing the Russian population’s labor productivity and economic activity, so an influx of immigrants is necessary for economic growth.

Translated by the Russian Reader

Offside: Number of Migrant Workers in Petersburg to Be Reduced Ahead of World Cup

DSCN2000A migrant worker shovels snow and ice in central Petersburg, December 21, 2017

Offside: Number of Migrant Workers in Petersburg to be Reduced Ahead of World Cup
Yelena Dombrova and Marina Vasilyeva
Delovoi Peterburg
January 11, 2018

Petersburg is preparing for the World Cup by tightening the residence rules for migrant workers. New federal laws could prevent restoring the flow of migrant workers, without whom the city’s economy is still unable to manage.

This year might prove critical for migrant laborers working in Petersburg. The flow of workers from other countries, which had picked up again last year after devaluation of the ruble, will be subject this year to legal restrictions, including restrictions occasioned by the World Cup.

Petersburg is one of the Russian cities where, from May 25 to July 25, 2018, the registration of foreigners at place of stay or place of residence will be executed within twenty-four hours from the date of arrival, rather than within seven days, as now. Such measures are stipulated by Presidential Decree No. 202, dated May 9, 2017, says Olga Duchenko, senior lawyer in the corporate and arbitration department at the firm Kachkin and Partners. People who violate the law in Petersburg will face fines between 5,000 rubles and 7,000 rubles [between 70 and 100 euros, approximately]. Foreigners can also be expelled from Russia.

The World Cup will be held in Russia between June 14 and July 15 of this year. The matches will be played at twelve stadiums in eleven Russian cities, including Petersburg. Our city will host matches between Morocco and Iran (June 15), Russia and Egypt (June 19), Brazil and Costa Rica (June 22), and Argentina and Nigeria (June 26). In addition, the city will host a second round match, a semi-finals match, and the third-place match.

This year, a number of laws on the registration of migrant workers will be tightened. The Russian parliament is thus currently discussing a law bill, now at the amendments stage, that would toughen criminal liability for fictitious registration of a foreigner or stateless person, says Duchenko. At the preliminary review stage are changes to the law on immigrant registration that would permit employers to cancel the registration of dismissed migrant workers.

The Recovery Will Become More Difficult
The number of migrant workers in Petersburg grew last year Thus, Petrostat, which relies on place of stay and place of residence registration data, has reported on the first nine months of 2017. 22,300 migrant workers from the CIS countries registered in Petersburg during this period, which is 71.5% more than during the same period the previous year. 10,300 migrant workers left the city, which is 20% fewer than the previous year.

Influx of Migrant Workers from CIS Countries to Petersburg, January–September 2017 

migration flows graphic-dp
The list of countries is as follows: Azerbaijan, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Uzbekistan, and Ukraine. Courtesy of Petrostat and Delovoi Peterburg

This year’s figures could prove to be exactly the opposite. Russia has already reduced the quota for temporary registrations issued by nearly 20% compared with 2017. Only 90,400 permits are planned for 2018. The reduction has affected the Northwestern Federal District as well.  The quota for obtaining temporary residence permits in 2018 will be 6,600 permits, as opposed to 9,300 permits in 2017. This is the most noticeable decline in recent years. In 2016, the quota was 10,000 permits; in 2015, it was 11,100 permits.

Nevertheless, a shortage of workers in Petersburg and Leningrad Region is not anticipated [sic].

“The overall number of migrant workers never exceeded five percent in the Losevo Group of Companies,” says Valeriya Ivanova, a development specialist with Losevo. “They are most employed at the dairy and on the farms as unskilled workers in accordance with immigration law.”

Ivanova stresses the group’s main production facility is located in Leningrad Region, far from Petersburg. Therefore, Losevo’s management is keen on employing local residents, i.e., the residents of the town of Svetogorsk and the village of Losevo, in the region’s Vyborg District.

Fire Them Just in Case
Changes to quotas could prove more palpable in the Petersburg labor market. Now, according to Russian Federal Government Decree No. 1467, as of January 1, 2018, employers can hire no more than 15% foreigners to work in retail alcohol and tobacco shops, and no more than 28% in companies engaged in passenger and freight transportation. As of January 1, migrant workers are forbidden to work in street trading and produce markets altogether. The proprietor, in possession of a license, should be the only person behind the counter.

“On the other hand, the quota for migrant workers in agriculture has been raised to fifty percent of jobs,” notes Chermen Dzotov, founder of the legal firm Dzotov and Partners.

Yuri Ragulin, owner of a chain of trading pavilions, is indignant.

“What is this? Tolerance or something? The fact is that, historically, Azeris have worked in the vegetable trade, for example. Why clamp down on this? What does it do for us? People have been in the business for eleven generations, they know what they’re doing. What I don’t understand is how I’m going to go out tomorrow and sell vegetables by myself.”

Ragulin believes that quotas in the retail trade will cause many people to go underground, leading to an increase in expenses, including bribes, and this will be reflected in the prices of goods.

“As for the World Cup, first, it lasts a month, and second, I have no clue why my shop at the train station in Zelenogorsk, for example, should be affected by the World Cup,” Ragulin concludes.

Petersburg human rights activists who deal with migrant workers note that many city policemen know how to say “Pay me 5,000 rubles” in Uzbek.

Ashot Efendiyev, owner of Monolith LLC, says that hiring foreigners to work behind the counter of a shop, market stall or kiosk has already been forbidden since May 2013.

“We don’t do it, because it’s simple dangerous. The fines run as high as 800,000 rubles [approx. 12,000 euros],” says Efendiyev. “The ban deals specifically with retail trade work behind a counter. If a person has a license, he can be hired for other work. So we have employed foreign electricians and stevedores. But now I’ve fired them just in case.”

Our sources in private universities that enroll foreigners say document checks of migrant workers have become more frequent. Paid enrollment is one way migrant workers from the near abroad use to stay in Russia legally.

“I think everyone will be expelled now, and our center will soon be shut down altogether,” says a female employee at one such university.

She says their students have always attended classes irregularly, but document checks began in the last several months, and the university administration has started expelling students who have missed several lectures in a row.

Photo and translation by the Russian Reader