Buggered

rossiya This bankrupt agribusiness was called Rossiya (“Russia”). Photo courtesy of Maxim Kemmerling/Kommersant and Republic

“The Data Leaves Us at a Loss”: A Few Figures That Might Surprise the Kremlin
Yevgeny Karasyuk
Republic
April 4, 2019

“Why on shoes? Why a third? Where did they get these figures?”

Dmitry Peskov, President Putin’s press secretary, responded with questions to journalists who questioned him yesterday about Rosstat’s depressing report for 2018.

According to Rosstat’s study, in which sixty thousand Russian households were surveyed, every fifth Russian skimps on fruits and vegetables. Every other Russian family cannot afford to travel anywhere when they have a week’s vacation, while every fourth family does not have enough money to invite people over to celebrate birthdays and the New Year’s holiday.

And, indeed, the report does conclude that 35% of Russians are unable to purchase each family member two pairs of seasonally appropriate footwear.

“I would be grateful to Rosstat if they clarified these figures. The data leaves us at a loss,” Peskov added.

Meanwhile, there are other figures—lots of figures—that would probably also bedevil the Kremlin if they were aired in public. Let us recall a few of them.

Nutrition
Consumer watchdog Rospotrebnadzor concluded that 63% of deaths in Russia were associated with bad food and poor nutrition. According to official figures, Russians spend approximately 35% of their household budgets on food, while independent researchers put that figure at over fifty percent. However, the average Russian household skimps on all purchases and tries to do without everything it can, claim the researchers behind Romir’s Coffee with Milk Index, which charts the quantities of chocolate, coffee, milk, and bottled water purchased by Russians. Researchers at RANEPA recently described the diets of Russians as unhealthy, unbalanced, and lacking in energy.

Health
According to a report by RANEPA’s Institute for Social Analysis and Forecasting, 22% of Russians who live in straitened circumstances face the stark choice of whether to buy the bare minimum of the cheapest produce or the cheapest drugs, drugs they need to survive. It is typical of Russians, not only those below the poverty line, to postpone going to the doctor, if it involves costs, noted researchers at the Institute for Health Economics at the Higher School of Economics.

Education
According to the pollsters at VTsIOM, fifty percent of Russian parents experience serious financial difficulties when getting their children ready for the first day of the school year. Over the past five years, the average sum of money Russians claim to spend getting children ready for school has increased by sixty percent, rising from 13,600 rubles to 21,100 rubles.

Housing
According to the Construction Ministry, the Russian populace’s debts for utilities and housing maintenance bills have grown by five and a half times since 2015. The ministry reported that, as of the end of last year, the total amount of this debt was 1.2 trillion rubles [approx. 16.34 billion euros]. The rates for water, electricity, gas, and other utilities and services increase rhythmically year after year, and yet the real incomes of Russians have continued to fall five years in a row.

Transportation
Forty percent of Russian car owners “try not to use their own vehicles, taking public transport instead.” Another 22% of car owners follow their lead, but do it less frequently. VTsIOM has explained the outcome of its January opinion poll by citing the concern of Russians for the environment while failing to note that the price of petrol has skyrocketed in recent years. Last year, a liter of AI-95 rose in price three times faster than inflation. The government has resorted to artificial, decidedly non-market measures to depress prices, and yet petrol in Russia is now twice as expensive as it was when the decade kicked off.

Only twelve percent of Russians believe that, when it describes the economy and the social sector, the Russian regime always or mostly tells the truth. The Levada Center has done polls on the same subject since 2010. Russian society’s confidence in what the country’s leaders and senior officials say has never been as low as it is now.

By voicing surprise at Russia’s poverty, at least on paper, the Kremlin is, apparently, determined to convince people it inhabits a parallel reality in which Russia makes one breakthrough after another, and the rank and file enjoy “stability” by way of spiting the country’s numerous enemies. Peskov seemed genuinely puzzled by Rosstat’s claim that Russian families have trouble buying shoes, but he probably had not yet read the government’s report on the increase in mortality rates in every third region of Russia. Clearly, something is wrong with the figures. In short, we expect a reaction.

Translated by the Russian Reader

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Why Most Russians Will Stay Home for New Year’s

Why Most Russians Will Stay Home for New Year’s
As Incomes Crumble, Even Celebrating with Friends Is Too Expensive for Them
Vladimir Ruvinsky
Vedomosti
December 27, 2018

New Year’s, apparently, has become a truly stay-at-home holiday. The number of Russians who plan to spend the long New Year’s holiday at home has jumped from 41% in late 2015 to 70% in late 2018, according to a survey by Romir, a Russian research company. The main reason is the rapid return to the conservative tradition of growing poverty and uncertainty in the future, combined with the desire to maintain previous levels of consumption of the most vital goods and services, which no longer include a winter holiday away from home.

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“How do you plan to spend the upcoming New Year’s holidays?” Overall: at home, 70%; at dacha, visiting relatives, 19%; traveling in Russia, 2%; working, 6%; traveling abroad, 2%; other, 1%. Average monthly income per family member of 10,000 rubles: at home, 73%; at dacha, visiting relatives, 18%; traveling in Russia, 2%; working, 6%. Average monthly income per family member of 10,000 rubles–25,000 rubles: at home, 74%; at dacha, visiting relatives, 17%; traveling in Russia, 1%; working, 5%; traveling abroad, 1%; other, 1%. Average monthly income per family member of 25,000 rubles or greater: at home, 56%; at dacha, visiting relatives, 25%; traveling in Russia, 4%; working, 8%; traveling abroad, 5%; other, 2%. Source: Romir, December 2018. Courtesy of Vedomosti

Surveys of the same representative selection of respondents have shown a drop-off in all other ways of spending the New Year’s holidays, which have basically become yet another period of time off work for Russians. The number of Russians planning to spend the holidays at the dacha or visiting friends or relatives has decreased from 34% to 19% in three years. Trips within Russia have dropped from 8% to 2%, while trips abroad have fallen from 4% to 2%.  Nearly everyone has been scrimping, including Russians with above-median incomes. Fifty-six percent of Russian with monthly incomes of 25,000 rubles [approx. $364] per family memberwill stay home, as will 74% of Russians with monthly incomes between 10,000 rubles and 25,000 rubles per family member. As Tatyana Maleva, an economist from RANEPA, notes, the Russian urban middle class, which has grown accustomed to traveling, cannot afford it.

The picture emerging from the survey reflects the mood of many Russians. Since 2014, real incomes have fallen four years in a row, and all indications are they will be shown to have fallen in 2018 as well. According to Rosstat, the monthly modal income in in 2017 was 13,274 rubles [approx. $233], while the monthly median income was 23,500 rubles [approx. $412]. Given these circumstances, the ruble’s devaluation, which has made trips abroad more expensive, is not such an important factor. In December 2015, one dollar cost as much as it does currently, 67 rubles, and its value was rising.

Holidays at home are not cheap, either. In November 2018, the percentage of Russians who had noticed a rise in prices had grown in comparison with October 2018, according to the Russian Central Bank. Forty percent of Russians noticed upticks in prices for meat and poultry; 32%, rises in the price of petrol; 28%, rising prices for cheese and sausage; while 26% had noticed that milk and dairy products were more expensive. All of these goods are part of the home holiday menu.

In comparison with 2014, consumption levels have fallen. They have not returned to their previous levels. Attempting to wriggle their way out of poverty or maintain their previous income levels, Russians have taken out an ever-growing number of consumer loans, which have proven difficult to pay back. Every fourth Russian who had outstanding loans in 2015–2017 spent 30% of their incomes paying them off, note Olga Kuzina and Nikita Krupensky, economists at the Higher School of Economics, in an article entitled “The High Debt of Russians: Myth or Reality?” published in the November 2018 issue of the journal Voprosy ekonomiki.

Generally, the Russian populace has transitioned to a minimalist model of consumerism, notes Maleva. Scrimping begins literally with the New Year. As Romir’s survey indicates, this transition has become a trend that will, apparently, shape the strategies and tactics of Russian consumers in the future, too. The only thing that has not changed over the years is the president’s televised New Year’s greeting: it costs nothing.

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

Falling

200 ruble note-1

200 ruble note-2A year ago, Russian Central Bank chief Elvira Nabiullina triumphantly introduced the new Crimea-themed two hundred ruble banknote into circulation. Since the economy is shaped more by flows of goods, resources, people, services, knowledge, and money, and the actions of ordinary people, decision makers, and the snake oil salesmen known as capitalists, and less by puerile revanchist neo-imperalist symbolism, the new banknote, pegged at €2.90 by Deutsche Welle only a year ago, is now worth a mere €2.65. I am keeping my specimen as a souvenir of the current bad times until better days arrive. Image by the Russian Reader

Fall in Real Incomes of Russians Accelerated Sharply in September
Economists Say Government’s Forecast No Longer Realistic
Tatyana Lomskaya
Vedomosti
October 17, 2018

Real incomes of Russians have declined for a second month in a row, Rosstat has reported. Their decline accelerated in September to 1.5% in annual terms after falling by 0.9% in August. Prior to that, they had grown for seven months, from the start of the year, by 1.7%. (This figure excludes the one-time 5,000-ruble payments made to pensioners in January 2017.) Real wages accelerated their growth in September, from 7.2% to 6.8% in the previous month.

Incomes of ordinary Russian had been falling for four years in a row, from 2014 to 2017, resuming growth only this year. In the first half of the year, they increased by 2.6%, mainly due to wage increases, notes Igor Polyakov from the Center for Macroeconomic Analysis and Short-Term Forecasting (TsMAKP). Business income increased only by 0.7%, while social transfers (excluding the one-time payment to pensioners) increased by 1.2%, which was significantly weaker than all incomes generally. Other sources of income decreased. There was a slight increase in incomes derived from property, but incomes received from securities and deposits decreased, as did, apparently, incomes from unreported activity, says Mr. Polyakov. He argues it is unlikely circumstances have changed considerably in recent months.

But the anxiety of Russians caused by the volatility of financial markets has increased, says Mr. Polyakov. People have taken to withdrawing cash from foreign currency accounts and transferring it to safe deposit boxes, as well as spending it abroad on holiday. Rosstat cannot register these expenditures and thus reduces its assessment of miscellaneous income. In August, the public’s net demand for US dollars grew by comparison with July from $0.8 billion to $1.7 billion, an increase of nearly 53%, the Central Bank reported.

Retail growth slowed in September to 2.2% in annual terms from 2.8% a month earlier. It is likely the public preferred buying foreign currency while curtailing consumption, argues Mr. Polyakov.

The drop in incomes combined with the serious increase in wages [sic] remains a mystery, writes Dmitry Polevoy, chief economist at the Russian Direct Investment Fund. The growth in real incomes in the first half of 2018 was mainly due to the presidential election campaign, notes Vladimir Tikhomirov, chief economist at BCS Global Markets. Salaries in the public sector and pensions increased rapidly. [That is, the Kremlin bribed Russians directly dependent on its largesse to get out the vote for President-for-Life Vladimir Putin—TRR.] After the election, growth stalled. And, after a palpable devaluation of the ruble in April and accelerating inflation, a dip in incomes was anticipated, argues Mr. Tikhomirov. In September, prices for imported goods rose. In addition, the seasonal discount on fruits and vegetables ended, and the July increase in utilities rates made itself felt, explains Mr. Tikhomirov.

By the end of the year, the incomes of Russians will gradually decline a little, while overall incomes will grow less than 1% on the year, predicts Mr. Tikhomirov. Real incomes might grow by 2% on the year, counters Mr. Polyakov. In any case, this is noticeably lower than official forecasts. The Russian Economic Development Ministry anticipated a 3.4% growth in real incomes in 2018.

Real incomes of ordinary Russians fell by 1.7% in 2017, although the government had forecast a 1.3% increase, the Federal Audit Chamber noted in its opinion on the draft federal budget for 2019–2021. When the forecast was corrected, incomes had decline dsteadily from the beginning of the year, and there were no preconditions for rapid growth by year’s end, the auditors write.

Income growth depends on whether private enterprise will increase wages, argues Mr. Polyakov, but thos wages will be subject to the planned rise in the VAT to 20% in 2019.

President Putin has set a goal of halving poverty by 2024. (The official poverty rate last year was 13.2% of the populace.) The Economic Development Ministry’s forecast significantly increased the growth rate of real wages and anticipated higher growth rates for real incomes, which has raised doubts at the Audit Chamber. There is no wage increase for public sector employees planned in 2019, while the growth of wages in the private sector will depend on growths in productivity.

Rank-and-file Russians have been forced into debt, write analysts from RANEPA and the Gaidar Institute in their opinion on the draft budget. By mid 2018, Russians owed banks 13.7 trillion rubles (approx. 181 billion euros), an increase of 19% from the previous year, they write, and an amount that significantly outpaces the increase in nominal incomes. It is an alarming trend that means an increase in the amounts of money ordinary Russians spend servicing loans, experts warn.

Translated by the Russian Reader

Free and Fair, or, The All-Russian University of Justice

Tests on Protest Rallies and Compulsory Voting in Workplaces: What Is Happening in Petersburg’s Public Sector Institutions as the Election Nears
Vladislav Chirin and Sofia Volyanova
Bumaga
March 7, 2018

In early March, a test about the law on protest rallies was distributed to lecturers in Petersburg’s tertiary educational institutions. Pupils at Petersburg schools have been forced to take the same test, while employees of schools and hospitals report they have been forced to apply for absentee ballots and vote at different polling stations under threat of punishment.

Bumaga has been monitoring the goings-on in Petersburg’s public sector institutions in the run-up to the March 18 presidential ballot. In the following article, we discuss what violations have already surfaced.

Schoolchildren Required to Pass Test about Law on Protest Rallies 
Pupils at a school in the Vyborg District told Bumaga that on March 6 all groups had been excused from classes in order to take a test on protest rallies. In particular, the pupils were quizzed on whether participants of public events had the right to bear arms and under what circumstances demonstrations could be held on Palace Square and Nevsky Prospect.

test“Tests like this have been handed out in Petersburg schools. This is only the second page of the test, featuring questions about the Field of Mars, invitations to protest rallies via the internet from persons unknown, etc.” Post courtesy of Telegram channel Somebody Else

According to senior pupils at the school, teachers removed them from their second period classes and made them stay during the break to familiarize them with the test. In the event, the teachers explained to the pupils what the right answers were.

When the pupils asked whether the test was connected with protest rallies organized by opposition politican Alexei Navalny, the teahers replied the test was being administered since a pupil at the school had been detained at one such rally and fined.

Central District School Headmaster and Vocational School Employee Talk about Compulsory Test
Svetlana Lebedeva, headmaster of Gymnasium No. 168 in Petersburg, also talked about the test. According to her, the prosecutor’s office had sent them the test, demanding it be administered to upperclassmen.

“It was by order of the district prosecutor’s office. The order was sent to Nelly Simakova, head of the Central District education department. They sent it to us. All the schools did it. The test was on Saturday, and today the pupils who were absent on Saturday took the test,” Ms. Lebedeva told MR7.ru.

On March 6, the same test was administered to students at all the city’s vocational schools, an employee at one of them told Bumaga.

MR7.ru also published a screenshot of the letter sent to educational institutions.  The letter makes it clear the testing had been administered at the behest of the city’s education committee after an urgent request from the Petersburg prosecutor’s office.

A pupil at Lyceum No. 126 has also told Bumaga that, during an event for war veterans on March 6, one of the guests took to the stage and urged attendees to vote for Vladimir Putin.

The prosecutor’s office and the education committee did not return our telephone calls.

Council of Rectors Sent Test on Protest Rallies to Lecturers at Tertiary Educational Institutions
Lecturers at Petersburg’s tertiary educational institutions allegedly received the same test about the law on protest rallies, only electronically.

Echo of Moscow reporter and Higher School of Economics graduate student Valery Nechay published a letter allegedly sent to Petersburg’s tertiary educational institutions. The letter asks university employees to take the test online “at the request of the Council of Rectors.”

letter“Dear colleagues! At the request of the Council of Rectors, staff at all educational organizations in St. Petersburg, including the Higher School of Economics, are being tested in order to determine the level of their knowledge of the laws on rules for holding and attending large-scale public events and the penalties for violating them. We strongly encourage to take ten minutes from your busy schedules and answer the questions before March 12, 2018. The correct answers will be provided immediately after you complete the test. To take the test, follow this link.” Post courtesy of Telegram channel Unexpected Joy.

The test, a link to which Nechay has published, features questions about the rights of people attending protest rallies and punishment for extremism. Some of the questions describe particular circumstances, for example, “You have been invited on the internet to attend a protest rally on the Field of Mars. The rally in question has not been authorized by the relevant executive authorities for the exact time or day listed. You are curious, however, and so you go to the rally. Have you violated the law?”

Students at Petersburg University Say They Have Been Forced to Monitor Elections 
First-year students at the Petersburg campus of the All-Russian State University of Justice have been assigned “compulsory on-the-job training” on March 18: they must attend the presidental election as grassroots monitors. They told the organization Petersburg Observers about their plight.

The correspondence published by Petersburg Observers makes it clear that if the students fail to report for duty they have been threatened with administrative punishments and bad marks in their permanent record. But if they show up for duty, they allegedly will have a day off on Monday, March 19, and be sent official thank-you letters.

observerss“Where do the fake election observers come from? On March 4, 2012 [the date of the previous presidential election] grassroots oversight was usually portrayed by pensioners and state employees. Over the past six years, however, the fake election observers movement has mastered the streams of financing, gone large scale, and become much younger. For example, first-year students at the Petersburg campus of the All-Russian University of Justice received this message from their class leader: ‘March 18 is a school day, compulsory on-the-job training, meaning that everyone will be a grassroots election observer at the polls. Sponsored by the Association of Lawyers, our university is officially taking part in the Observers Corps for Clean Elections event, so if you do not show up you face administrative penalties and a bad mark in your permanent record.’ In addition to free food and transportation on voting day, letters of gratitude and a day off from classes on March 19 have been promised to the students. Basically, this is how correct public opinion is forged: in return for a day off, free grub, and a certificate of [political] trustworthiness.” Screenshot of a post on the VK community page of Petersburg Observers for Fair Elections 

A student at the Petersburg campus of the Russian Presidential Academy of National Economy and Public Administration (RANEPA) has told Bumaga that out-of-town students at the academy are going to be forced to vote in the presidential election. However, he was unaware of whether the students would be encouraged for turning out or punished for failing to vote.

ranepa“Very Important Information! In the next 30 minutes ALL out-of-two students need to shoot back the following information: what resources you will use to vote in the March 18 Russian presidential election; where you will vote (at what polling station); how you will register to vote. Send it to https://vk.com/%5Bdeleted]. […] Basically, we have been asked by [illegible] to register as many people living in each section as possible to vote. Meaning that each manager is responsible for his section and, subsequently, for sending everyone off to vote. The section in which the most people vote will get the Prize Sector [a reference to the “prize” section on the spinning wheel in the Russian version of Wheel of Fortune]. Ideally, you could assemble your entire section and all go together to the district voting commission. This is a mandatory request that concerns everyone. I think it is in our interest to give our vote . . .” Screenshoots of correspondence among RANEPA students. Courtesy of Bumaga

Schoolteachers and State Employees in Petersburg Say They Are Being Forced to Apply for Absentee Ballots and Vote Somewhere Other than Their Own Polling Stations
A teacher at a school in the Central District has told Bumaga that the school’s headmaster has obliged the entire teaching staff to report to the polling station in School No. 183 [an English-language magnet school on Kirochnaya Street in downtown Petersburg] on voting day. According to her, the teachers in all Central District schools have been given the same orders.

According to the teacher, if staff fail to vote as instructed, they will be given extra work during the spring holidays, from March 26 to April 1. When the voting is over, the headmasters of the Central District’s schools will receive lists of teachers who reported to the polling station in School No. 183, the teacher said. Her headmaster added, however, the orders were “not his whim,” but that all school headmeasters had received the same orders from the “top brass.”

Instances in which the heads of state-sector institutions have tried to force staff and students to apply for absentee ballots and vote at other polling stations have been reported by Petersburgers claiming to be employed at the Center for the Social Rehabilitation of Disabled People and Disabled Children in the Krasnoye Selo District, the Center for Social Assistance to Families and Children in the Central District, the Alexander Hospital, Children’s Health Clinic No. 68, Children’s Health Clinic No. 71, the Leningrad Regional School for Culture and Art, School No. 684 [a kindergarten and grammar school in the Kirov District in the city’s south], and the Municipal Monitoring Center.

Violations Reported by Members of Several Petersburg Election Commissions 
Member of Precinct Election Commission No. 1164, located in City Hospital No. 15, have reported that Irina Nikolich, the polling station’s deputy chair, had drawn up absentee ballot declarations, based on photocopies of four voters’ internal passports, although the voters themselves were not present at the polling station, and Nikolich came to the polling station when it was not her shift.

The polling station was visited by police officers, who interviewed witnesses and submitted the evidence to the Investigative Committee.

Members of Territorial Election Commissions No. 1 and No. 14 have reported to Bumaga that in their electoral districts, precinct commissions had in several instances approved four ballot boxes for at-home voting, although only three ballot boxes are legally required. The extra ballot boxes could lead to vote rigging and ballot box stuffing.

UPDATE
On the evening of March 7, Territorial Election Commission No. 1 reduced the number of mobile ballot boxes in its district to three.

Students at St. Petersburg State University of Film and Television Complain They Have Been Forced to Vote (Updated March 10, 2018) 
A student at the University of Film and Television told Bumaga he and his classmates in the Screen Arts Department had received a message from the student leader of second-year students.

The message made it clear that the master of the filmmaking course had informed the student leader that students who did not vote would be threatened with explusion, said the source. The dean’s office had allegedly issued the orders, and all students were required to register to vote at the same polling station.

Another student at the university told Bumaga she and her classmates had received messages containing a list of five polling stations at which they had to register to vote. Information about whether a student had registered to vote or not would allegedly be reported to their department. The students were promised they would be given postcards at the polling stations that could be used to get into a private screening of the film Dovlatov, the young woman told us.

Translated by the Russian Reader

Poor Russians Up to Their Necks in Debt

ruble coin 2This one-ruble coin, minted in 2014 and sporting the newish symbol for the ruble, adopted in 2013, won’t buy you love or much anything else. 

Poor Russians Go into Debt
Tatyana Lomskaya
Vedomosti
October 11, 2017

Low-income Russians have been unable to wait for an uptick in incomes and have turned to loans to meet their consumer needs. Experts, including the Central Bank, believe such borrowers are a danger to the economy.

The demand of Russians for loans has been growing. In August, their arrears to banks rose to levels not seen since the spring of 2014. Ruble-denominated loans reached their maximum historic high, according to RANEPA’s monthly newsletter Monitoring the Economic Situation in Russia. Banks have been vigourously issuing loans. In July, they provided Russians with 23% more loans than at the same time last year. Consumer loans have been the fastest growing. According to the National Credit History Bureau, such loans increased by 27% over the past eight months.

Loans have been playing a growing role in the budgets of Russian families, notes the newsletter. In the first six months of the year, new loans made up 21% of household final consumption expenditures. This is significantly higher than the crisis levels of the last two years (15–18%), although it is still below the peak levels of 25–27% in 2013–2014. With virtually no increase in the real incomes of individuals, this generates additional risks to their financial circumstances, noted RANEPA’s analysts.

Residents of poor and distant regions are the biggest borrowers of consumer loans at the moment, along with the poorest segments of the populace, notes Natalya Zubarevich, director of the regional program at the Independent Institute for Social Policy. This is how they offset falling incomes. Wages in Russia have been growing since August 2016, but real incomes have continued to fall.

People cannot skimp and save forever. People turn to loans to meet their needs, says Zubarevich. What matters is that banks not issue too many loans, which would raise the specter of a huge number of defaults.

The debt burden has been growing more quickly in regions with the highest poverty levels, according to the FR Group, although the situation varies from region to region, notes project manager Anastasia Zyurkalova.

Russians have been spending more and more of their income on consumption. According to some indications, they have abandoned the savings model of financial behavior, acknowledges Yelena Grishina, head of RANEPA’s research laboratory on pension systems and social sector actuarial forecasting. One of the ways they survive is by taking out loans. Certain segments of the populace have outlived the means they once had for limiting consumption. In the first six months of 2017, a linear dependence bwtween increases in the volume of loans and poverty levels in the regions was observed, says Grishina. Russians are now more positive than a year ago: they have assessed the changes in their welfare, and the percentage of those who skimp on food and clothing has decreased, note RANEPA’s analysts [sic].

The burden of non-mortgage loans is highest in regions with high unemployment and a poorer populace, Alfabank’s chief economist Natalya Orlova wrote last autumn. The middle class [sic] would be unlikely to emerge as the main source of the growth in demand for retail loans, she noted. The average borrower is more likely to be someone with a limited income. Judging by the numbers for the first six months of 2017, nothing has changed, says Orlova. It is still less well-off Russians who want to bring their consumption up to average levels. The increase in retail loans in the poorest regions is likely due to people’s tapping out their savings and and trying to maintain a certain level of consumption, agrees Karen Vartapetov, an analyst at S&P.

A significant portion of the demand for consumer loans comes from people whose incomes are less than the median income in Russia. Often, their incomes are unstable as well, and their debt burdens are high, noted analysts in the Central Bank’s research and forecasting department. (Their opinions may differ from the financial regulator’s official stance.)  Yet banks currently do not really have the capacity for an increase in lending, and so even a moderate uptick in consumer loans is fraught with risks no less serious than during the 2010–2012 loan boom. To limit these risks, the Central Bank has been working out individual debt burden indicators, notes a source at the regulator. The share of an individual’s expenditures on repaying loans should be such she could continue to pay back the loan even if negative events were to occur.

For the time being, the largest banks surveyed by the Central Bank have reported that the percentage of borrowers with increased levels of debt burdens has not grown, and the number of people with monthly incomes of less than 20,000 rubles [approx. 290 euros] who have taken out cash loans has fallen, says the source at the regulator. The banks have been forced to behave more conservatively. Everyone well remembers the wave of late payments in 2012–2013, says Yuri Gribanov, CEO of Frank RG.

After the crisis of 2015, the quality of loan applicants has not improved considerably, notes Sergei Kapustin, deputy board chair of OTP Bank. There are still many people with problematic debts that have not been managed and refinanced at another bank. According to certain channels, the share of such debts is ten percent, and banks have been forced to lower the number of loans they issue. In addition, a number of bankers issue unsubstantially large loans to people who have borrowed money at other banks in amounts disproportionate to their incomes.

The demand for consumer loans is currently quite high, says Mikhail Matovnikov, Sberbank’s chief analyst, and there are still a lot of extant bad loans at high interest rates, especially among low-income Russians. This not at all what the economy needs, and it is bad for borrowers, too, he argues.

The banks’ fight against such loans has pushed borrowers into the arms of microfinance institutions, where the circumstances can be even worse. This year, the microlending market has grown from 186 billion rubles to 242 billion rubles [approx. 3.5 billion euros]. The banks have not met the steadily growing demand for loans, according to research by microlender Home Money.

home money

A screenshot from Russian microlender Home Money’s website. “It’s simpler to make a phone call than to borrow from somebody! Call if you need to! New services: personal legal consultant; home protection; credit history.”

Measures to limit interest rates cooled the consumer lending market in 2015–2016, notes Dmitry Vasilyev, an analyst with Fitch. Currently, the portfolio’s growth matches the nominal growth in incomes of Russians (2–3% during the first sixth months of 2017) and the percentage of risky and unsecured loans has lowered. Some borrowers have drifted to the microlenders, while some banks have been weeded out due to noncompliance with tougher standards, says Vasilyev.

Orlova points out the banking sector is at a crossroads. Maintaining quality lending means not taking on as clients people working in the informal sector and incapable of confirming how much they make and microlenders currently lending at very high rates. Or banks could increase their appetite for risk and take on inferior borrowers to increase their market shares and loan portfolios. Banks have to earn money. If there are no borrowers willing to pay (for example, the government, which would have to become much more active in the state debt market), the issue would become particularly critical. Prospects for income growth in the coming year are worsening, and the risk that not very well-off people would not be able to service their loans is growing, warns Orlova. Poverty will not seriously decline in Russia in the coming year, if we believe the government’s three-year macro forecast, as submitted to the State Duma. It will drop from 12.8% of the populace this year to 11.2% in 2020, i.e., it will not drop to the levels of  2012–2013 (lower than 11%).

Translation and image of the ruble coin by the Russian Reader. Thanks to Comrade Koganzon for the heads-up. The original article, as published yesterday by Vedomosti on the front page of its paper edition, was behind a paywall. Thanks to Press Reader for providing me with the text of the article.