Out of Sight, Out of Mind

DSCN1726Goodbye to all that. Exchange rates for the US dollar and the euro, as displayed electronically on the door of Zauber Bank, Ligovsky Prospect, September 19, 2018. Photo by the Russian Reader

Putin Signs Law Banning Outdoor Currency Exchange Rate Electronic Display Boards
Delovoi Peterburg
December 18, 2018

President Putin has signed a law banning outdoor foreign currency exchange rate electronic display boards. The document was published on the Legal Information Website on Tuesday, December 18.

The document amends the law on foreign currency regulation. The Russian Central Bank now has the right to regulate how commercial banks post information about foreign currency exchange rates.

In Febrary 2018, the Central Bank proposed banning foreign currency exchange rate electronic display boards outside the premises of banks. The regulator explained the idea was prompted by the need to combat illegal exchange offices.

“As practice shows, information about foreign currency exchange rates is most often displayed outdoors by so-called illegal currency exchange points, which are camouflaged as limited service branches of authorized banks,” the Central Bank’s press service explained.

In December, a law bill that would grant the regulator the right to establish requirements for display of such information was adopted by the State Duma and approved by the Federation Council.

The Central Bank’s draft instructions explain that information about foreign currecy exchange rates can be placed only within the premises of an authorized bank and in such a way that the information is visible only inside the facility itself.

Translated by the Russian Reader

Are Russians Eating Well?

DSCN1832A fruits and vegetables stall at the famous Hay Market (Sennoy rynok) in downtown Petersburg, September 29, 2018. Photo by the Russian Reader

Eating Their Fill: Russia’s Food Security in the Wake of Crimea
Have Russians Eaten Better After the Government Moved to Defend Them from Western Food? 
Yevgeny Karasyuk
Republic
December 6, 2018

Soon after the embargo that was imposed four years ago in response to the stance of western countries on Crimea, analysts warned Russia itself would primarily suffer from food anti-sanctions.

“We won’t heighten the Russian Federation’s food security at all. In fact, we will reduce it,” Natalya Volchkova, a professor at the New Economic School, said at the time.

Of course, the criticism of the experts was ignored. No one in government questioned the policy of forced import substitution. Most Russians even imagined it was a rare instance when the government made a good decision. Only a few years ago, 71% of the populace [sic] spoke in favor of limiting imports.*

Time has passed, and the experts to whom no one listened have compiled figures showing where the policy has taken the country. A recent report, authored by a group of researchers from RANEPA, provides an analysis of its consequences.

Import substitution in the food sector was an obsession and, at the same time, a source of pride for ex-agriculture minister Alexander Tkachov. His replacement, Dmitry Patrushev, son of the Russian Security Council’s secretary and a none-too-successful state banker, has changed little in the government’s take on the situation. The new minister is certain Russia has reached a level of self-sufficiency above 90% in terms of basic food staples. Thus, Alexei Gordeyev, deputy prime minister for agriculture and an ex-agriculture minister himself, is convinced Russia has successfully carried out import substitution.

Food imports actually did slump sharply—by 46%—from 2013 to 2016. Although an unbiased analysis if how Russian producers succeeded in turning the tables and quickly saturating the market with their own products would point to the ruble’s sudden devaluation, rendering foreign imports uncompetitive, as had already happened in recent history, rather than to the success of the anti-sanctions.

Whatever the cause of Russia’s newfound food independence, however, it has not lead to food security. Citing the international standard, the authors of RANEPA’s report define food security as “the physical and economic availability of safe nourishment, sufficient for an active, fulfilling life.” In other words, there really are more domestically grown and produced food items in Russia nowadays, but the bulk of the populace has less and less access to them.

“Caloric Value of the Russian Diet.” The blue line indicates caloric value, while the dotted line indicates the recommended daily caloric intake per family member in kilocalories. The light purple area indicates the number of Russians who suffer from obesity, in thousands of persons, while the shaded dark purple area indicates the number of Russia who suffer from anemia, also in thousands of peoples. Source: Rosstat and RANEPA. Courtesy of Republic

Last year, Russia was ranked forty-first in the Global Food Security Index, compiled by the Economist Intelligence Unit, meaning that it ranked lower than it had in 2013, when it ranked fortieth. This was due, among other things, to insufficient funding of research and a reduction in the variety of food products.

According to official statistics, food accounts for approximately 35% of expenses in Russian household budgets, which is a high proportion when compared with the OECD countries, among which even the highest percentages, achieved by Poland and Mexico, fall short of 25%. Independent evaluation of spending on food, however, claim that the proportion of Russian family budgets spent on food is actually over fifty percent. Given the almost continuous drop in the real incomes of Russians, the selection of products has declined in quality and abundance. On average, Russian households continue to skimp on everything they can do without, as confirmed by the compilers of the Coffee and Milk Index, as published by Romir, a Russian marketing research company. (The index tracks sales of chocolate, coffee, milk, and bottled water.) RANEPA’s researchers noted the discrepancy between the excess fat in the food and bread Russians eat and the low number of calories in their diets.

By closing the borders to imports and showering the domestic agro-industrial complex with generous state subsidies—1.2 trillion rubles [approx. 15.9 billion euros] in the past six years from the federal budget alone—the regime has persuaded itself it has been filling the nation’s bellies and improving its health. Its expectations were exaggerated, however. Oversaturated with cheap carbohydrates, the standard fare eaten by many Russians remains unbalanced and low on energy. “This is borne out by widespread anemia among the populace as a whole and children in particular,” RANEPA’s researchers write. The number of Russians who suffer from obesity has grown for the same reason.

Obviously, these problems cannot be written off as temporary glitches in demand in the domestic food market, whose revival has been unanimously trumpeted by former agriculture ministers and the current agriculture minister. Rather, they are the natural consequence of systemic problems with the natural resources economy that shoulders the burden of the Kremlin’s geopolitical capers. The average Russian family often simply cannot afford a plentiful variety of healthy, high-quality food.

The authors of RANEPA’s report have emphasized this.

“Neglecting this fact can lead to a distorted picture of the state of food security,” they write.

However, there is still very little chance the alarming conclusions of the experts will be heard this time around, forcing the government to make adjustments to its food policy.

* How did they do that? Was a nationwide referendum held? The author, of course, is referring to a so-called public opinion poll in which, at best, a thousand or two “ordinary” Russians were asked loaded questions, to which they gave the “right” answers. {TRR}

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Russians Spend 30% of Their Budgets on Food
Georgy Tadtayev
RBC
December 17, 2018

Russians spend nearly a third of their household budgets on food. Russia lags behind Montenegro, Latvia, and Turkey in this sense. Russians spend less than seven percent of their budgets on culture and leisure.

According to RIA Rating, as reported by RIA Novosti, Russians spent 31.2% of their household budgets on food in 2017.

The estimate of the percentage of their household budgets people in forty European countries, Russia, Kazakhstan, and Turkey spend on food was based on information from the IMF and national statistics agencies. Russia ended up in the bottom ten of the ranking, ranking 31st. Its nearest neighbors were Montenegro (29.7%) and Latvia (31.7%).

Ukrainians spend the greatest portion of their household budgets on food: 50.9%. People in Kazakhstan (46%, 39th place) and Moldova (43.4%, 38th place) also spend more than 40% of their budgets on food.

Western European countries topped the rating. Luxembourg came in first place. Residents of the duchy spend a mere 8.7% of their money on food. Close behind Luxembourg were Great Britain (10%) and the Netherlands (10.6%).

The agency also ranked countries according to percentages of income spent on alcohol and cigarettes. Residents of three Balkan countries—Romania (8.2%), Bulgaria (5.1%), and Serbia (4.7%)—spend the most on bad habits. Luxembourg (1.3%), Moldova (1.5%), and Cyprus (1.6%) spend the least on alcohol and cigarettes. Russia ranked 24th: Russians spend 3% of their househould budgets on bad habits.

Sweden was the top-ranked country in terms of spending on culture and leisure: Swedes spend 18.7% of their budgets for these purposes. Moldovans spend the least on leisure and culture: 1.3%. Russia ranked 21st: Russians spend 6.9% of their money in this category.

Translated by the Russian Reader

Squandering Its Way to Superpowerdom

“Squandering”: Did the US Secretary of State Grasp the Russian Approach to Budget Spending?
The Kremlin Accused the State Department of Tactlessness and Unprofessionalism, Yet Pompeo’s Remarks Were on the Mark
Yevgeny Karasyuk
Republic
December 13, 2018

padrino.jpgVenezuelan Defence Minister Vladimir Padrino gives his thumb up as he sits on the cockpit of a Russian Tupolev Tu-160 strategic long-range heavy supersonic bomber after it landed at Maiquetia International Airport, north of Caracas, on December 10, 2018. Courtesy of Federico Parra/AFP/Getty Images

Russian’s decision to send strategic bombers on a junket to an airport near Caracas elicited a curious reaction from US Secretary of State Mike Pompeo, who publicly expressed his pity for Russian taxpapers, whose money the Kremlin, habitually disregarding the costs, has been spending on its geopolitical moves.

“The Russian and Venezuelan people should see this for what it is: two corrupt governments squandering public funds, and squelching liberty and freedom while their people suffer,” Pompeo wrote.

The Russian Foreign Ministry responded by calling Pompeo’s statement “utterly unprofessional” and even “villainous.” Pompeo’s remarks, which the Kremlin, in turn, dubbed “inappropriate” and “undiplomatic,” were apparently really lacking in nuance: the hardships of Russians, fortunately, cannot yet be compared with the suffering of Venezuelans. But, hand on heart, was Pompeo so wrong when he talked about the losses to the Russian federal budget and lack of oversight?

Russian society has an extremely vague notion about how much the Kremlin’s expansionism has ultimately cost the country. According to calculations made by IHS Jane’s at the outset of Russia’s operations in Syria in autumn 2015, Russia could have been spending as much as $4 million a day. Later, the Yabloko Democratic Party, which is not seated in the Russian parliament, estimated the Kremlin had spent a total of 108–140 billion rubles [between $1.6 and $2.1 billion] on Syria. A more accurate assessment would be difficult to make. Experts doubt that anyone, including the Finance Ministry, keeps tabs on such expenditures. Thus, nobody knows the real cost of Russia’s involvement in the Syrian conflict, argues the Gaidar Institute’s Military Economics Laboratory.

The budget’s fading transparency has been a trend in recent years. In 2016, secret and top-secret allocations accounted for 22% of total federal budget expenditures, a record for the entire post-Soviet period, and much higher than secret allocations in comparable countries, according to RANEPA’s March 2015 report on the Russian economy.

Quite naturally, this state of affairs has not improved the quality of the state’s financial decisions. In terms of effective state spending, Russia ranked nineteenth in a new rating of twenty-five countries, compiled by the Higher School of Economics using data from the World Bank and OECD. Since they are not priorities for the current regime, problems with child mortality and life expectancy were among the reasons Russia ranked so low in the survey: the government spends more on the army than on healthcare—4.3% of GDP versus 3.8% of GDP, respectively. In these circumstances, the chances the Kremlin’s strategic projects in the Middle East and Africa (e.g., the Central African Republic, Burkina Faso, the Democratic Republic of the Congo, and Mozambique) will be decently funded are always much greater than the national healthcare project, which stipulated increased government spending on cancer treatment. The government nixed the plan over summer.

Since it remains largely Soviet in spirit, Russia’s foreign policy has been categorically blind to history’s lessons. The Soviet Union’s exorbitant geopolitical ambitions and support for fringe regimes around the world left the country with a legacy of mostly toxic multi-billion-dollar debts. The process of writing them off has been disguised as a form of international charity or, speaking diplomatically, official development assistance (ODA). According to RANEPA, writing off the debts of developing countries accounted for 35% of all such “international aid” last year or $425 million. It has been the Russian government’s usual way of doing business. Previously, the Russian government wrote off the debts of Nicaragua ($6.3 billion), Iraq ($21.5 billion), North Korea ($10.9 billion), Syria ($9.8 billion), Afghanistan ($11 billion), and Cuba ($29 billion), among other countries. Venezuela risks joining this sad list. Over the past twelve years, Russia has invested a total of $17 billion in the country.

Russia’s Expenditures on Official Development Assistance (Excluding Humanitarian Aid), 2005–2017, in Millions of Dollars. Sources: OECD, Russian Finance Ministry. Courtesy of Republic

Since it was paid for by the Russian federal budget, which has been running a deficit for the last seven years, Russian officials probably did not see the transatlantic flight of its strategic bombers as too expensive. On the contrary, they saw it as a flashy display of Russia’s military prowess and proof of its influence in the region. However, the government of Nicolás Maduro signed off on the stunt. Subject to growing pressure from creditors and an angry, desperate population, it lives day by day. In all likelihood, it will soon collapse, leaving behind a mountain of unpaid bills and unfulfilled obligations to its allies. If this is the case, can we evaluate the Russian government’s action better than the tactless Mike Pompeo did? Probably not.

Translated by the Russian Reader

Making Life Easier for Vegans in Petersburg

Анастасия Емельянова, основатель VegCode
Anastasia Yemelyanova, VegCode founder. Photo courtesy of Sergei Yermokhin and Delovoi Peterburg

A Barcode for Vegans: Petersburgers Develop App for Identifying Vegan Products Through Barcode
Inna Reikhard
Delovoi Peterburg
December 12, 2018

App Interests a Thousand Users in Single Woeek
Petersburgers Anastasia Yemelyanova, Alyona Kabardinova, and Nikolai Dubrovsky have developed the mobile VegCode app (Vegan IT LLC). Made available to users in early December, the app is designed for vegans. It lets shoppers use barcodes to figure out whether or not items in stores contain animal products and have been animal tested. The app currently has a database of 26,000 items marked “vegan” and “non-vegan.” Most of the items are edibles and cosmetics. Household cleaning products will soon be added to the list.

A Growing Segment
As the designers explained, there is a demand for the app, since the number of vegans in Russia has been growing at a rate of fifty percent annually. There are now approximately 150,000 vegans in Russia.

The team has been preparing to expand the app’s functionality by adding a map of vegan shops, cafes, and producers. The app, which operates in Russia and the CIS, will earn money by advertising the services of these businesses.

Attracting Investors
“Unlike Western Europe and the US, the problem of identifying vegan goods is much gnarlier in Russia, because there is not a well-defined system for labeling goods and far fewer speciality magazines,” Yemelyanova explains.

For example, you might find a retail item labeled “Lenten,” but it might not be appropriate for vegans. On the other hand, producers sometimes have no clue their product lines include ethical products.

The startuppers commenced work on the app in early 2018. They raised money on the crowdfunding website Planeta. They also made it to the finals of Philtech Accelerator, winning a 100,000-ruble prize from the Higher School of Economics. The team got another 300,000 rubles from venture investor Alexander Rumyantsev.

Yemelyanova says the hardest thing was compiling the database of retail items marked “vegan.”

“We get information about the content of products from open sources. Our users can also add items via the app. After they are moderated, the new items are listed in the database,” a spokesperson for the company said.

In a week’s time, the nearly thousand users who downloaded the app have suggested 4,000 more items for inclusion in the database.

Prospects
The market for vegan products in Petersburg has been growing rapidly. In 2015, sales were estimated at 80 million rubles [approx. 1 million euros]. In 2017, this figure climbed to 400 million rubles [approx. 5.3 million euros].

Petersburg has several dozen fast food outlets and shops catering to vegans, including Bunker and B12 Vegan Shop.

Petersburg is also home to a small number of vegan producers. Businessman Ivan Ivanov, for example, makes lactose-free dairy products, wheat steaks, and other edibles under the Primal Soymilk brand. Verde produces cheese and curd. Veganov makes soy and vegetable sausages, while Soymik produces soy-based products.

“Petersburg has the most thriving vegan movement in Russia. The city also has a growing number of vegan producers. Mainly, however, these are small businesses in which not a lot of money has been invested. Their products are usually not sold in retail chains, but I think the day when they’ll be sold there is not far off,” says Ivanov.

Ivanov says he had thought himself about making an app for identifying vegan products.

Translated by the Russian Reader

House of Cards

mir-sberbankA disembodied hand proudly holding a Sberbank-issued Mir card. Photo courtesy of PressTV

Central Bank Preparing for Cutoff of Some Banks from International Payment Systems
Regulator Asks Small Banks to Have Backup Intermediary Able to Service Their Cards
Anna Yeryomina
Vedomosti
December 6, 2018

The Russian Central Bank has asked small banks to find a backup partner that would be able to service their bank cards. This would be an asset if their current intermediary banks were cut off from international payment systems.

The Central Bank is concerned with the continuity of card transactions in banks that work with payment systems indirectly, that is, via an intermediary bank. The regulating authority has advised these indirect clients of payment systems to contract with another bank, besides their primary intermediary bank, that could supply them with access to card payment systems. Five bankers confirmed to us they had received the memorandum.

The memorandum also says the contract should provide for a test exchange of information when integrating with the new intermediary banks. It also states payment systems should draft an action plan and recommend it to their participating banks.

The major intermediary banks are Payment Center Credit Union, Uralsib, VTB Bank, Rosbank, and Promsvyazbank.

A Central Bank spokesperson stressed the memorandum was only advisory, but it was based on international recommendations for risk management in payment systems. The need for banks to contract with backup intermediary banks is not so obvious. According to several of its recipients, in early autumn the Central Bank had sent banks a letter urging them to draft plans to ensure the continuity of payments, but it had not recommended any specific measures.

Switching intermediary banks is a time-consuming, expensive process that takes between three to six months, notes Maya Glotova, director of Kartstandart, a processing center that partners with Payment Center Credit Union. The most high-profile case occurred in 2013 after Master Bank’s license was revoked. As Glotova recalls, Master Bank had functioned as an intermediary bank in payment systems and provided payment processing services. Small banks had to halt their operations for several weeks, and several of them had to leave the payments business. Glotova estimates it would cost a single bank more than $100,000 to switch intermediary banks in the three payment systems.

Intermediary banks had little to say about the memorandum. A spokesperson at Promsvyazbank promised to follow the Central Bank’s recommendations, while a spokesperson at VTB Bank said their own intermediary program had worked well.

Several bankers believe the Central Bank is hedging not only against the collapse of intermediary banks but also potential sanctions, which are fraught with the possibility that intermediary banks would be cut off from Visa and Mastercard, as occurred in 2014 and 2015. The United States has been drafting a new set of sanctions that could affect major banks. Payments within Russia would not be affected: these transactions are processed by the National Payment Card System (NSPK). Russian bank cards, however, would not function abroad. (A spokesperson for NSPK, which operates the Mir payment system, said they had not received the Central Bank’s memorandum.)

VTB Bank had drafted a plan to counter sanctions, its president, Andrei Kostin, told the TV channel Rossiya 24 in October.

“We have been mapping out with both the government and the Central Bank how to avoid the consequences, especially for individuals and companies. I think we can overcome them. I don’t think the sanctions will be wholesale and directed against the entire financial sector,” Kostin said.

Translated by the Russian Reader

Migrant Worker Blues

OLYMPUS DIGITAL CAMERACentral Asian migrant workers queuing outside the Russian Interior Ministry’s work permit application center on Red Textile Worker Street in St. Petersburg. Photo by the Russian Reader

Should Everyone Disappear into the Shadows? What the Fee Increase for Migrant Worker Permits Entails
Yekaterina Ivashchenko
Fergana News
November 29, 2018

The license [in Russian, patent] system for foreign nationals seeking permission to work in Russia was introduced in 2015. The cost of a work permit has varied from one region to the next. In Moscow, for example, it initially cost 4,000 rubles a month. In 2016, the price rose by 5% to 4,200 rubles, and in 2018, it rose by 7% to 4,500 rubles.

It is absolutely necessary to have a work permit. Without it, a migrant worker faces up to 7,000 rubles in fines, expulsion from Russia, and a ban on entering the country for a period of three to ten years. Employers who hire employees without work permits are punishable by fines, and their operations can be suspended for up to ninety days.

Something important happened on November 21, 2018. The Moscow City Duma approved a law bill increasing the cost of a work permit in Moscow. In 2019, it will rise by 500 rubles (11%) and cost 5,000 rubles a month (approx. $75).

The next day, November 22, Moscow Mayor Sergei Sobyanin said the city’s revenues from legal migrant workers had been growing and would exceed 16 billion rubles ($241 million) by year’s end.

“By paying such a high price for permits, migrant workers have come to occupy a fair position vis-à-vis Russian nationals [rossiyane] working in Moscow, because in the past they paid nothing at all, and, of course, it was profitable to employ them, but the situation has changed today,” said the mayor.

On January 1, 2019, the cost of a license for migrant workers seeking employment in Moscow Region will increase by 450 rubles. The Moscow Region work permit, which cost 4,300 rubles ($64.60) in 2018, will cost 4,750 rubles ($71.50) per month in 2019.

Taras Yefimov, chair of the Moscow Regional Duma’s budget, finance and tax committee, said the measure would enrich the region’s coffers by around one billion rubles [approx. $15 million]. In 2018, Moscow Region made six billion rubles [approx. $90.5 million] on migrant work permits.

St. Petersburg has decided to raise the price of the work permit from 3,500 to 3,800 rubles a month. City officials noted the decision was made because foreign nationals had begun earning considerably more money.

Filling out the forms for extending a work permit. Photo courtesy of Fmskam.ru and Fergana News

Wages Are Not Growing
Svetlana Salamova, director of Migranto.ru, a website for migrant workers looking for jobs and employers seeking to hire migrant workers, has not seen the real growth in the wages of migrant workers that officials have cited.

“The wages of foreign nationals who are employed on the basis of work permits has remained at the level of 29,000 rubles to 35,000 rubles [$435–$525] a month. Maybe the Moscow authorities are focused on high-profile specialists who make 168,000 rubles a month officially?” Salamova sarcastically wondered.

Salamova has noticed wage increases only among Kyrgyz nationals. After Kyrgyzstan joined the EAEU (Eurasian Economic Union), employers offered them 40,000 to 45,000 rubles a month.

“But they work without permits. (EAEU nationals can work in Russia without permits as long as they have an employment contract — Fergana News.) Besides, many Kyrgyzstanis agree to low wages of 19,000 to 20,000 rubles a month. They work part time in several places at once, and so ultimately they make a decent amount of money,” explained Salamova.

Salamova did not discount the possibility that fees for work permits have been raised in light of the fact that employers must index wages for inflation as of the new year. Perhaps the authorities decided to increase the cost of permits for foreign national because they took into account this indexation of wages on the Moscow job market.

Immigration center in Moscow. Photo courtesy of Mos.ru and Fergana News

But what do migrant workers themselves have to say about it?

“Since 2015, the fee for the work permit has increased three times, but I have not even once received a raise. We spend little as it is: 4,500 rubles for the permit, plus the fee for residence registration; 6,000 rubles on rent, 5,000 on groceries, 2,000 on transportation. I sometimes buy clothes and medicines, and there are unforeseen expenses, like when my phone stops working. So, I have only 10,000 rubles left over from my monthly salary of 35,000 rubles. The latest 500-ruble increase will definitely affect my expenses. 6,000 rubles a year is a lot of money: an average family in Tajikistan could live for a month on that amount. It means my relatives back home will have to get by one month of the year without receiving a remittance from me,” said Magomed, who comes from Khujand, Tajikistan’s second-largest city.

Pushed into the Gray Economy
In June 2017, Mayor Sobyanin said the problem of illegal migrant workers in Moscow had been solved and had ceased to be a source of concern for Muscovites. Most migrant workers were employed legally and duly paid their taxes.

Experts believe the increase in the price of the work permit could lead to a rise in the number of foreign workers who decide not to pay taxes.

“The cost of the work permit will increase by 11%. An extra 6,000 rubles a year might not seem like a huge amount of money. But for migrant workers, who earn this money literally with their blood, living far from their families, and undergoing numerous hardships and risks, this is not a small amount at all: the overall cost of a permit for a year will be 60,000 rubles or $900. Some migrant workers will thus decide to go off the books. Consequently, Moscow’s budget is unlikely to get a huge boost, but the city will be supporting a policy of pushing migrant workers into the gray economy with all the attendant social consequences,” says Professor Sergey Abashin.

“It is odd that Moscow MPs say we will start earning more. Every migrant worker pays around 12,000 rubles to get a work permit in the first place. Then every month he pays for the work permit and his residence registration, he pays the rent, and he buys groceries. He even has to pay bribes to the police. People are taking money from us at every turn. What will we have left to send home?” said Muhammad, who is originally from Samarkand.

Batyrzhon Shermuhammad, a lawyer and founder of the website Migrant, also sees no signs of a wage increase.

“If you look at the want ads, you will see that the wages of migrant workers who are employed on the basis of work permits range from 25,000 rubles to 35,000 rubles a month. We monitor the job market, and no one mentions anything about a salary of 40,000 rubles a month. On the contrary, the economic crisis in Russia has been deepening. There is inflation, and the dollar/ruble exchange rate has been rising, which affects the remittances sent by migrant workers,” Shermuhammad said.

The latest increase in the cost of the work permit will force migrant workers to retreat into the shadows, he argues.

“One could understand the increase if the economic situation had improved, but the trends are negative: the prices in shops have increased, and the dollar has become more expensive vis-à-vis the ruble. People have no money, and so they have been having problems with residence registrations. Also, by law you cannot be late paying for your work permit even by a day. If a migrant worker is paid his wages late, he cannot pay the fee for his work permit, and he has no way of shelling out approximately 12,000 rubles to have a new work permit drawn up. While introduction of the work permit system brought migrant workers out of the shadows, the subsequent tightening of immigration laws and the increase in their expenses has been leaving migrant workers with fewer chances to stay legal, even if they would want to,” Shermuhammad said.

Migrant workers from Kyrgyzstan. Photo courtesy of Kloop.kg and Fergana News

“Even though I make good money, a 6,000-ruble increase in the price of the work permit is a serious expense, and I have huge expenses aside from the permit. My mother, sister, and I pay 33,000 rubles a month for a place to live. That is 11,000 rubles per person, plus utilities. In addition, I have to pay the fees for my studies twice a year: that is another 100,000 rubles each time. We don’t spend a lot on food, no more than 10,000 rubles per person a month. I also spend money on transportation, clothes, and gifts, and I spend 5,000 to 7,000 rubles a month for English lessons. Lately, we have not been sending a lot of money home, $200 to $300 per month at most. Mom and I used to be able to save money, but in the last six months our expenses have skyrocketed, and after the new year they will increase even more due to the work permit. Basically, the increase in the work permit fee means I won’t be able to pay for English lessons for a month,” said Ilkhom, who hails from Tashkent.

“For migrant workers, 500 rubles is a mobile phone connection for a month,” said human rights active Karimjon Yorov. “It is the cost of a week’s worth of subway trips. It is two lunches, finally. For families with children, it means being able to buy school supplies or pay for school lunches. In short, 500 rubles is a lot of money.”

Yorov argues that raising the cost of the work permit will make migrant workers not want to pay for it, meaning that revenues to Moscow’s coffers will actually decrease.

“Migrant workers will prefer to work without a permit and cross the border every three months. Currently, a trip to the border and back (i.e., exit and re-entry) costs 8,000 rubles in total, while the cost of a work permit for three months is 13,500 rubles, meaning they save 5,500 rubles by exiting Russia and re-entering it. This comes to 22,000 rubles, plus 12,000 rubles for the initial paperwork. The total is 34,000 rubles, which is the same as the cost of round-trip plane ticket to Uzbekistan. When you do the maths, it makes more financial sense for migrant workers to be off the books. The authorities themselves are forcing migrant workers underground, especially now that the laws on immigration registration have been tightened. Whether you get a work permit or not, if you do not live at the address where you are registered, you will be deported. Migrant workers will emerge from the underground only when the law on immigration registration has been abolished,” Yorov concluded.

Thanks to Sergey Abashin for the heads-up. Translated by the Russian Reader