Once they scrambled to grab what they could from a disintegrating Soviet state, exploiting the political and economic chaos of the post-communist Boris Yeltsin era to secure state enterprises, oilfields and mineral deposits at knockdown prices. But now Russia’s uber-wealthy oligarchs are rushing to shore up a failing state effort to curb the spread of the coronavirus.
Rumblings of discontent are growing in Russia over Vladimir Putin’s handling of the pandemic. His approval ratings fell to an historic low for him — down to 59 % last month from 63 % the previous month, according to the independent pollster Levada Center.
Even the normally loyal state-owned broadcaster Russia Today ran a report last week warning that the country risks a double-digit unemployment rate and a “return to the pain of the economic miasma of the Yeltsin years [that] would have unpredictable consequences for President Putin.”
The Russian leader is facing the biggest test of his presidency, but has passed on most of the responsibility for battling the deadly virus to the country’s regional governors.
Tasking regional governors with the main responsibility for tackling the coronavirus reverses the policy Putin has pursued since coming to power, say analysts and Russian media commentators. The Kremlin has over the years curbed the powers of the governors, insisting Russia needs a strong a central government.
“It is in the interest of all of us for the economy to return to normal quickly,” Putin said Monday when announcing the end of the non-working period. But a return to normality seems a long way away. On Tuesday his own spokesman, Dmitry Peskov, checked himself into a hospital after testing positive, the fifth senior official to have to do so.
Putin is being accused of wanting to distance himself from the pandemic, fearing the political fallout, say some analysts. Earlier this week the Russian leader announced the end of a nationwide "non-working period,” leaving to the governors to decide whether to ease lockdowns in their regions or not. His announcement draw derision from many Muscovites, who pointed out that just hours before his announcement, health authorities reported the biggest one-day increase so far in infections.
“Despite having created a highly centralized political system, he is not going to be the commander-in-chief of this war. Instead, he would rather force local leaders to take the tough decisions, demanding they both save lives and save the economy, while sniping at them from the sidelines,” according to Mark Galeotti, an analyst at Britain's Royal United Services Institute (RUSI), and a columnist for the Moscow Times.
“He is retaining real power, but handing his boyars the burden of coronavirus,” he adds.
In their turn the governors have found Russia’s oligarchs ready to try to help them to plug the holes left by the state in the struggle to curb the virus. The embrace of social responsibility by some of Russia’s prominent high-rollers — including steel magnate Alexei Mordashov, who instructed four regional governors to lock down their cities where he has mills, and mining magnate Vladimir Potanin, who has spent more than a hundred million dollars on testing kits, protective masks and ventilators — has surprised some.
When the virus was bearing down on Russia, some independent news outlets reported wealthy Russians were rushing to buy ventilators, adding to shortages. Moscow-based medical pulmonologist Vasiliy Shtabnitskiy, told reporters he was aware of rich Muscovites hoarding ventilators. Although he added that might not do them any good without plenty of supplies of pressured oxygen and other crucial equipment as well as trained staff. But for the super wealthy — especially the mega-rich oligarchs — bespoke medical teams would not be beyond their reach.
But in recent weeks as cases have mounted — Russia has the second fastest rate of new infections globally — and discontent increased with a smattering of protests, the oligarchs started to intervene. Metals magnate Oleg Deripaska is funding three COVID-19 clinics in Siberia. The oligarchs have presented their involvement as being motivated by patriotism, avoiding overt criticism of the state strategy, although Deripaska publicly urged in March the Kremlin to seal shut all borders and to impose a 60-day quarantine on the country.
Analysts say oligarchs need to be mindful of the unwritten deal between them and Putin of not getting involved in politics. They have examples to warn them of the danger of breaking the deal, including the case of oil magnate Mikhail Khodorkovsky, who was the world’s 16th richest man when arrested in 2003 on charges of fraud and embezzlement and sentenced to a nine-year prison stretch.
Patriotism or not, some analysts hazard that the oligarchs are moving now to try to fill in the holes for fear that the system Putin presides over — which also protects their wealth — is facing serious risks.
The Russian president has had to put on hold his plans to rewrite the Russian constitution, which would allow him another 12 years in office, “while the Kremlin tries to deal with both the virus and a new economic crisis,” says Tatiana Stanovaya, an analyst with the Carnegie Moscow Center, a think tank. “These twin challenges represent the biggest shock the Putin regime has ever faced and are likely to feed popular dissatisfaction,” she adds.
The economic fallout is mounting. A quarter of working-age Russians say they have lost their jobs or expect they will soon. Six out of ten Russians have no savings. There have been isolated protests and analysts say there’s a real prospect of much wider unrest, once the pandemic starts to accelerate beyond Moscow and St. Petersburg, where hospitals and local health services have been neglected for years.
On Monday, the Kremlin appeared to understand the danger. Putin made his fifth address to the nation since the coronavirus outbreak, announcing new measures for supporting ordinary Russians as well as small businesses. Among the measures — bonuses for doctors and social workers, benefits for families with children, preferential credit terms for company owners and tax exemptions for small businesses. There had been mounting public criticism of the neglect of small business with preferential treatment going to much bigger concerns previously.
The measures received praise from economists. “For the first time during the crisis we are seeing that the size of payments is at least somewhat in line with what economists wrote about, and what opposition leaders suggested,” Konstantin Sonin, a professor at the University of Chicago and Russia’s Higher School of Economics, told Meduza, an independent news site.
Evsey Gurvich, an economist, agrees, but told Meduza it would have been better “if there had been a large-scale, anti-crisis program announced at the very beginning of the crisis — this would have helped many to decide not to close their businesses.”
Whether the new measures will dampen political frustration is unclear. For working-class Russians the new payments will cover their grocery costs for one month.
And few believe the coronavirus death toll the Kremlin has been publishing. In Moscow alone, the country’s coronavirus hotspot where 52 % of the officially registered confirmed cases have occurred, analysts as well as the city’s mayor say coronavirus-related cases and fatalities are being seriously under-reported.
Russia confirmed 9,974 new coronavirus infections Thursday, bringing the country’s official tally of cases to 252,245. The total nationwide death toll is put at 2,305 — a mortality rate much lower than other European countries with better reserved and rated health-care systems. The Kremlin says Russia was able to learn lessons from the experiences of western Europe.
Trust in the mortality rate officially given is low. Russia’s first recorded virus-related fatality — an elderly woman who died on March 19 — was reclassified as having died from a blood clot.