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As Putin Dallies, Russia’s Small Businesses Are Withering Away As Putin Dallies, Russia’s Small Businesses Are Withering Away
(3 days later)
ST. PETERSBURG, Russia — Two weeks into the coronavirus lockdown, Aleksandr B. Zatulivetrov, a Russian businessman, had had enough.ST. PETERSBURG, Russia — Two weeks into the coronavirus lockdown, Aleksandr B. Zatulivetrov, a Russian businessman, had had enough.
In defiance of President Vladimir V. Putin’s orders, he announced that he would reopen one of his two restaurants in the center of St. Petersburg unless the Kremlin declared a state of emergency, a legal provision that would allow him to stop payments to banks and landlords and force the government to offer compensation.In defiance of President Vladimir V. Putin’s orders, he announced that he would reopen one of his two restaurants in the center of St. Petersburg unless the Kremlin declared a state of emergency, a legal provision that would allow him to stop payments to banks and landlords and force the government to offer compensation.
“Where are your voices? We all have tens of workers who need jobs!” Mr. Zatulivetrov, 48, wrote in a plea to other restaurant owners to join him. “We are dying!”“Where are your voices? We all have tens of workers who need jobs!” Mr. Zatulivetrov, 48, wrote in a plea to other restaurant owners to join him. “We are dying!”
Thanks to a “rainy day fund” of more than $550 billion, accumulated from the sale of oil when the prices were high, Russia is likely to weather the economic storm created by the coronavirus better than many countries. But it risks losing much of a sector that Mr. Putin has for years touted as the key to Russia’s long-term economic success — small and midsize businesses.Thanks to a “rainy day fund” of more than $550 billion, accumulated from the sale of oil when the prices were high, Russia is likely to weather the economic storm created by the coronavirus better than many countries. But it risks losing much of a sector that Mr. Putin has for years touted as the key to Russia’s long-term economic success — small and midsize businesses.
Unlike many Western governments, the Kremlin has so far provided little support to business. The overall relief package in Russia has amounted to less than a quarter of what is being injected in Germany, and most of the support has been aimed at helping large corporations, many of them owned or closely entwined with the state. Only around $10 billion has been pledged to small businesses so far.Unlike many Western governments, the Kremlin has so far provided little support to business. The overall relief package in Russia has amounted to less than a quarter of what is being injected in Germany, and most of the support has been aimed at helping large corporations, many of them owned or closely entwined with the state. Only around $10 billion has been pledged to small businesses so far.
Aleksei A. Navalny, one of Mr. Putin’s most vocal critics, has said that the aid should be pumped up to $27 billion, but the Kremlin has accused him of populism.Aleksei A. Navalny, one of Mr. Putin’s most vocal critics, has said that the aid should be pumped up to $27 billion, but the Kremlin has accused him of populism.
As the coronavirus pandemic began to advance through Russian cities at the end of March, Mr. Putin issued orders that required businesses to both shut down and continue paying salaries. But he did not specify where owners were supposed to get the money.As the coronavirus pandemic began to advance through Russian cities at the end of March, Mr. Putin issued orders that required businesses to both shut down and continue paying salaries. But he did not specify where owners were supposed to get the money.
“I paid everything I had to my employees,” Mr. Zatulivetrov, 48, said in an interview.“I paid everything I had to my employees,” Mr. Zatulivetrov, 48, said in an interview.
With entrepreneurs like Mr. Zatulivetrov largely left to fend for themselves, the pandemic is threatening to undo decades of effort to diversify Russia’s economy. If small and medium businesses fail, the health crisis will leave Russia’s economy disfigured and even more dependent on the Kremlin.With entrepreneurs like Mr. Zatulivetrov largely left to fend for themselves, the pandemic is threatening to undo decades of effort to diversify Russia’s economy. If small and medium businesses fail, the health crisis will leave Russia’s economy disfigured and even more dependent on the Kremlin.
Those businesses account for a small part of Russia’s output compared with state-run behemoths like Gazprom and Rosneft, but they are a particularly vibrant part of the economy, employing more than 18 million people, or a quarter of the work force, and pioneering new fields beyond oil and natural gas.Those businesses account for a small part of Russia’s output compared with state-run behemoths like Gazprom and Rosneft, but they are a particularly vibrant part of the economy, employing more than 18 million people, or a quarter of the work force, and pioneering new fields beyond oil and natural gas.
Since the “shock therapy” market overhaul of the early 1990s, Russian entrepreneurs have gone from shady trades such as selling tainted alcohol in kiosks to, in some cases, running internationally acclaimed restaurants and producing high-quality clothing and food. However, the attitude of the Russian authorities toward them has changed little since the times when the Soviet financial police, the Department Against Misappropriation of Socialist Property, fought ruthlessly against “profiteers” reselling American jeans.Since the “shock therapy” market overhaul of the early 1990s, Russian entrepreneurs have gone from shady trades such as selling tainted alcohol in kiosks to, in some cases, running internationally acclaimed restaurants and producing high-quality clothing and food. However, the attitude of the Russian authorities toward them has changed little since the times when the Soviet financial police, the Department Against Misappropriation of Socialist Property, fought ruthlessly against “profiteers” reselling American jeans.
In March, Mr. Putin reversed his earlier praise for small businesses, saying in an interview that “there are certain grounds” to regard business owners as swindlers, echoing the Soviet bias against entrepreneurs but somewhat undercutting his own cheerleading of smaller industry.In March, Mr. Putin reversed his earlier praise for small businesses, saying in an interview that “there are certain grounds” to regard business owners as swindlers, echoing the Soviet bias against entrepreneurs but somewhat undercutting his own cheerleading of smaller industry.
“The government believes people in retail are all crooks,” said Irina M. Nurullayeva, owner of a chain of four flower shops in St. Petersburg. “The problem is that all these officials have not been in touch with normal life since the 1990s, when this could have been the case.”“The government believes people in retail are all crooks,” said Irina M. Nurullayeva, owner of a chain of four flower shops in St. Petersburg. “The problem is that all these officials have not been in touch with normal life since the 1990s, when this could have been the case.”
Lalya N. Sadykova, an owner of a chain of 12 barbershops and three beauty salons in St. Petersburg, said she had so far received no help at all. Her multiple letters to the local authorities have gone unanswered. With little money left, she bought about four pounds of rice, flour, buckwheat and a bottle of cooking oil for each of her 17 neediest workers, many of them young single mothers.Lalya N. Sadykova, an owner of a chain of 12 barbershops and three beauty salons in St. Petersburg, said she had so far received no help at all. Her multiple letters to the local authorities have gone unanswered. With little money left, she bought about four pounds of rice, flour, buckwheat and a bottle of cooking oil for each of her 17 neediest workers, many of them young single mothers.
She complained that taxes had been deferred, rather than waived, during the lockdown.She complained that taxes had been deferred, rather than waived, during the lockdown.
“They had to cancel taxes for the duration of quarantine, not simply offer a deferral,” Ms. Sadykova, 36, who started her business in 2002 with only $500 in her pocket, said in an interview in one of her closed salons. “We scream everywhere that we are such a great country, but when push comes to shove, the government cannot assume responsibility.”“They had to cancel taxes for the duration of quarantine, not simply offer a deferral,” Ms. Sadykova, 36, who started her business in 2002 with only $500 in her pocket, said in an interview in one of her closed salons. “We scream everywhere that we are such a great country, but when push comes to shove, the government cannot assume responsibility.”
So far, the Russian government has offered subsidized loans, limited tax cuts and tax holidays to help businesses. The subsidized loans became an embarrassment when the country’s economy minister could not get one himself despite calling two banks to test the system.So far, the Russian government has offered subsidized loans, limited tax cuts and tax holidays to help businesses. The subsidized loans became an embarrassment when the country’s economy minister could not get one himself despite calling two banks to test the system.
Mr. Putin also offered two grants of $160 per worker to cover a portion of their salaries for April and May. But few qualify for the grants, which cover only companies that have retained at least 90 percent of their employees as of April 1. In any case, $160 is inadequate for the losses incurred, covering only a third of an average salary and only for two months, business owners said.Mr. Putin also offered two grants of $160 per worker to cover a portion of their salaries for April and May. But few qualify for the grants, which cover only companies that have retained at least 90 percent of their employees as of April 1. In any case, $160 is inadequate for the losses incurred, covering only a third of an average salary and only for two months, business owners said.
“If this lasts for longer than three months, the whole story of small business will become part of the history textbooks,” said Eduard M. Emdin, 50, a co-owner of Wynwood, a hotel in St. Petersburg named after a neighborhood in Miami famous for its graffiti walls.“If this lasts for longer than three months, the whole story of small business will become part of the history textbooks,” said Eduard M. Emdin, 50, a co-owner of Wynwood, a hotel in St. Petersburg named after a neighborhood in Miami famous for its graffiti walls.
Mr. Emdin is still paying salaries and even offered to put up some of his 33 employees in the hotel’s 38 rooms, most of which stand empty. In May, he faces a $100,000 payment to the city government, but so far there has been no talk of deferring it.Mr. Emdin is still paying salaries and even offered to put up some of his 33 employees in the hotel’s 38 rooms, most of which stand empty. In May, he faces a $100,000 payment to the city government, but so far there has been no talk of deferring it.
Propped up by a windfall of petrodollars, the Kremlin has little incentive to rescue small companies. In 2019, the Russian budget received 39 percent of its revenue by taxing the sale of oil and gas. Those revenues will drop significantly this year with the drop in oil prices, but the Russian Finance Ministry said it would use $27 billion from its rainy day fund to make up the difference.Propped up by a windfall of petrodollars, the Kremlin has little incentive to rescue small companies. In 2019, the Russian budget received 39 percent of its revenue by taxing the sale of oil and gas. Those revenues will drop significantly this year with the drop in oil prices, but the Russian Finance Ministry said it would use $27 billion from its rainy day fund to make up the difference.
“Their top priority, bluntly, is to save money and spend as little as possible without creating significant social and political instability,” said Vladimir Tikhomirov, a Russian economist working for BCS Global Markets in Moscow, said of the Kremlin. “If it is a small cafe or restaurant that will never be able to sustain the crisis, they will not see it as a big tragedy.”“Their top priority, bluntly, is to save money and spend as little as possible without creating significant social and political instability,” said Vladimir Tikhomirov, a Russian economist working for BCS Global Markets in Moscow, said of the Kremlin. “If it is a small cafe or restaurant that will never be able to sustain the crisis, they will not see it as a big tragedy.”
Nowhere in Russia is the potential strength of small enterprises more evident than in Mr. Putin’s native St. Petersburg, Russia’s grand former imperial capital that now largely lives off tourism.Nowhere in Russia is the potential strength of small enterprises more evident than in Mr. Putin’s native St. Petersburg, Russia’s grand former imperial capital that now largely lives off tourism.
In 2015, two medical students and an English teacher from provincial Russian towns came to St. Petersburg with a dream of opening a bar. Having capital of just $15,000, they started in a basement under one of St. Petersburg’s sprawling courtyards, not far from where Fyodor Dostoyevsky wrote “The Brothers Karamazov.”In 2015, two medical students and an English teacher from provincial Russian towns came to St. Petersburg with a dream of opening a bar. Having capital of just $15,000, they started in a basement under one of St. Petersburg’s sprawling courtyards, not far from where Fyodor Dostoyevsky wrote “The Brothers Karamazov.”
The Mexican-themed bar, El Copitas, opened at the height of a domestic economic crisis, propelled by another drop in oil prices and Western sanctions over the annexation of Crimea and meddling in Ukraine. Despite that, within a year, El Copitas was voted one of the top 100 bars in the world. Last year, it was ranked No. 27.The Mexican-themed bar, El Copitas, opened at the height of a domestic economic crisis, propelled by another drop in oil prices and Western sanctions over the annexation of Crimea and meddling in Ukraine. Despite that, within a year, El Copitas was voted one of the top 100 bars in the world. Last year, it was ranked No. 27.
Updated June 12, 2020Updated June 12, 2020
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.
The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.
Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.
Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home.Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home.
States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)
Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications.Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications.
The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.
If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.
Artem V. Peruk, one of the bar’s co-founders, said that the Mexican government had offered them more help than the local one in St. Petersburg.Artem V. Peruk, one of the bar’s co-founders, said that the Mexican government had offered them more help than the local one in St. Petersburg.
Many other businesspeople in St. Petersburg said that they did not expect help from the Russian government and would be happy just to be left alone.Many other businesspeople in St. Petersburg said that they did not expect help from the Russian government and would be happy just to be left alone.
“I achieved everything honestly and I don’t expect any help,” said Denis S. Shevchenko, the owner of Gate 31, a brand of locally produced clothing. “Just give me the rules and let me open, even for one customer at a time,” he added.“I achieved everything honestly and I don’t expect any help,” said Denis S. Shevchenko, the owner of Gate 31, a brand of locally produced clothing. “Just give me the rules and let me open, even for one customer at a time,” he added.
Mr. Zatulivetrov, the restaurateur, no doubt felt the same. But four days after he announced his plans to reopen, the police called him for a talk. Though he had already received 177 reservations, he quickly changed his mind and, in a sudden turnaround, became concerned about public health.Mr. Zatulivetrov, the restaurateur, no doubt felt the same. But four days after he announced his plans to reopen, the police called him for a talk. Though he had already received 177 reservations, he quickly changed his mind and, in a sudden turnaround, became concerned about public health.
“Only by sitting at home can we prevent the avalanche-like spread of the coronavirus,” he said in a Facebook post last week.“Only by sitting at home can we prevent the avalanche-like spread of the coronavirus,” he said in a Facebook post last week.
Another entrepreneur, Sergei V. Shamakhov, 35, who in four years built a dental clinic with a staff of 50, described the conundrum.Another entrepreneur, Sergei V. Shamakhov, 35, who in four years built a dental clinic with a staff of 50, described the conundrum.
“In Russia, you can develop a business rapidly, but there is a downside,” he said. “You can die out as quickly, too.”“In Russia, you can develop a business rapidly, but there is a downside,” he said. “You can die out as quickly, too.”
Andrew E. Kramer contributed reporting from Moscow.Andrew E. Kramer contributed reporting from Moscow.