Stakes keep rising ahead of Moscow city elections

The Bell

Hello! This week we take a deep dive into the political situation in Moscow ahead of local elections Sunday that could have consequences way beyond their size. We also look at why the 15th anniversary of the Beslan terrorist attack has generated such interest, new data showing how fast Moscow’s internet shopping market is growing, highlights of an interview with the Russian brothers who built a multi-billion dollar online gaming empire, and the sad tale of the Russian executives whose VIP jet was delayed for 14-hours.

Stakes keep rising ahead of Moscow city elections

Elections to Moscow’s legislature will take place Sunday after some of the largest anti-Kremlin street rallies in Russia since 2012. The momentum behind the protests has waned in recent weeks, but there is still to play for. Ahead of the vote, Russian courts have been busy handing down draconian jail sentences to protestors detained at rallies in July and August.

  • Russia’s legal system has seemed particularly Orwellian this week. Programmer Konstantin Kotov, 34, was sentenced Thursday to four years in jail for attending three peaceful protests that were not sanctioned in advance by the authorities. Several years ago, another activist was jailed under the same law, but Russia’s Constitutional Court later overturned his sentence. A video of Kotov’s arrest shows him being grabbed after exiting the metro.
  • Other sentences were similarly severe. Ivan Podkopaev, who admitted spraying a chemical at police officers, was sentenced to three and a half years and Danil Beglets, father of two young children, who admitted tugging a police officer’s arm, was sentenced to two years. Perhaps most controversially of all, this week also saw the sentencing of Vladislav Sinitsa, 30, who didn’t go to any of the protests, but who wrote a tweet interpreted as threatening the police. The tweet said, if you studied the geolocation on the family photos of police officers, then “a child of a defender of law and order might simply not come home from school one day”. Sinitsa was convicted of “incitement of hatred or enmity” and sentenced to five years in prison.
  • When asked about the protests, President Vladimir Putin said Thursday that young people should direct their energies in a “creative” direction, and have more children. But he also admitted that protests sometimes have positive results because they can “shake-up” the authorities.
  • Whatever Putin’s position, officials are sending contradictory signals: while one court hands down a draconian sentence, another throws out charges. This week, courts rejected prosecutors attempts to strip two couples who took their children to protests of their parental rights. And two closely-watched cases were effectively put on hold: student Yegor Zhukov was transferred to house arrest and well known independent journalist and municipal deputy Ilya Azar was released from police custody (after arrest on charges like those on which Kotov was jailed for four years). Azar was arrested in his slippers Monday when he stepped out of his apartment to smoke. His sleeping two-year old daughter was left alone — police did not allow Azar to lock the door or wait until his wife could return home. It’s unclear whether there will be a trial; Azar himself believes the case will be put on ice.
  • Contradictions are not only to be found in the corridors of power. Opposition leader Aleksei Navalny has launched a ‘smart voting’ project that calculates which candidates not put forward by City Hall have the best chance of winning — and calls for maximum support for these candidates. However, because there are no genuinely independent candidates in the running (why the protests began in the first place), most of those identified by Navalny’s project for support are Communists. Inevitably, Navalny has now been accused of supporting the Communists.
  • ‘Smart voting’ is obviously a threat to the authorities — as well as being a dry-run for national elections. But many aren’t keen, and the authorities have been pushing back. A few days ago, Muscovites received text messages encouraging them to vote according to “union lists”. What kind of unions they were referring to was unclear, but the list, as one might have guessed, included pro-government candidates.
  • From an investigation (Rus) by Proekt, we have learnt more of the details about how the whole conflict over Moscow’s legislature unfolded. It all started in the spring when officials apparently realised that the opposition was heading for a comfortable victory — and a decision was taken to exclude all the independent candidates.

Why the world should care

The Bell spoke with experts who said (Rus) the authorities are trying to avoid new protests and make it clear that no-one will give in to the opposition’s demands. City Hall is already gearing up for another round of conflict and has ordered face recognition technology to be used at future protests (we reported about investment in such technology). The most important question now is what happens after the elections. Will the protests continue and how will they evolve?

Why was the 15th anniversary of the Beslan attack so widely commemorated?

This Tuesday was 15 years since a terrorist attack in Beslan that shocked the world. More than 300 people, mostly children, were killed when a school was taken hostage by Chechen terrorists. The official version of the tragedy is that it ended in such bloodshed because of a series of accidents — and no senior officials were ever punished for what happened. But parents of victims and journalists implicate the security services in a litany of mistakes.

  • Putin has visited Beslan twice: the first time was the night after the hostages were freed, and the second was four years later. The authorities would clearly prefer memories of Beslan to fade, but the trend is going in the opposite direction. In fact, the tragedy was commemorated more in 2019 than it was five years earlier. Federal media mentioned Beslan twice as often as they did on the 10th anniversary of the tragedy, according to Medialogia research for The Bell.
  • Three major YouTube films were released to mark the latest anniversary, which were watched by a total of 11 million people. The most popular (Rus) was made by journalist Yury Dud and it turned into an extraordinary example of crowd-sourcing. Former hostages featured in his film had their bank cards blocked after viewers inundated them with donations, and one woman, who sells flowers to pay for medical treatment, had all her flowers bought up and saw her social media following explode. Not everyone liked it, however: state-owned television channels trashed Dud’s work, with the participant of one evening talkshow claiming that it was “excusing terrorism”.
  • If you want to read more about Beslan, this piece by journalist C.J. Chivers is one of the best things in English on the topic.

Why the world should care

The media are talking more about Beslan because there is more space to do so, according to Denis Volkov, the deputy director of the Levada Center. And attempts by state television to discredit trust in independent films aren’t work (a dynamic mirrored in the support for protests in Moscow that holds up despite negative coverage), said Volkov. This is yet another indicator of how trust in state-owned television channels is falling as online media sources gain ground.

Online shopping growth in Russia outpaces global average

There aren’t many sectors in Russia growing at a faster rate than the global average, but internet shopping is one (Rus) of them. Russians placed 191 million orders online in the first half of 2019, which is the same as the whole of 2018, according to Data Insight.

  • The number of online purchases in Russia rose 44 percent between January and June to an all-time high. This is significantly above global averages: international online shopping growth is forecast to reach 21 percent this year while India, traditionally one of the fastest growing markets, expects 32 percent growth.
  • Patterns of online behaviour in Russia are changing. The data showed a significant increase in the number of buyers who make 15 or more online purchases a year, and the average per purchase check fell by 14 percent to about $56. It’s clear that Russia’s internet shopping boom is being driven by ‘routine’ online purchases.
  • Wildberries (which sells clothes, shoes, and household goods) is one of Russia’s fastest growing online platforms: in January, it processed a third of the country’s online purchases. Now worth $1.2 billion, Wildberries was founded by a woman (a rarity in Russia): former English teacher and mother of three Tatiana Bakalchuk. Russia’s first female billionaire was the wife of former Moscow Mayor Yuri Luzhkov — Bakalchuk was the second.
  • Despite its impressive growth, Russia’s internet shopping market still has enormous potential. In China, 500 million people shop (Rus) online every day: Russia has less than 2% of these volumes.

Why the world should care

This data is a reminder of the ongoing battle to be crowned ‘Russia’s Amazon’. Wildberries is a major player, but it would be premature for them to claim victory. The company is up against other heavyweights including Yandex (Russia’s Google), Russia’s largest bank, Sberbank, and a tie-up between Internet holding and Chinese retail giant Alibaba.

Slumdog billionaires: how two brothers from Russia built a gaming empire

Brothers Dmitry and Igor Bukhman are each worth about $1.4 billion. No-one had any idea they were so rich until it was first reported by Bloomberg in 2019: while 100 million people play games developed by their company, Playrix, neither sought out the spotlight. The Bell’s founder Yelizaveta Osetinskaya recently spoke with the brothers for her video project Russians are OK!. This was their first video interview and the first episode of Russians are OK! after the summer break. You can watch the full video here (in Russian), and we have selected a few highlights.

  • The Bukhmans were born, grew up and began working in Vologda, a small city northwest of Moscow known for its dairy farms and handmade lace. They launched their business in 2001 when Igor was in university and Dmitry still in high school. By 2005 they had already generated their first $1 million in revenue.
  • Crunchbase has reported Playrix had revenues of $1.3 billion in 2018, while analytical firm Newzoo put the figure at $1.2 billion. The brothers themselves did not comment on the figures, but said the estimates were “adequate”. In August, Playrix was rated the third largest mobile gaming company in the world by revenue — only Chinese investment giant Tencent and internet technology company NetEase are larger.
  • The Bukhmans reinvest their earnings, and have never sought external funding. At the moment, they have no plans to sell the business — although they are not short of interesting offers, not least from Chinese investment giant Tencent.
  • Playrix’s headquarters is in Dublin, Ireland, and the company employs another 1,300 people who work remotely or from offices in Vologda, Moscow, Kyiv, Yerevan, and Almaty. The brothers originally planned to move to the U.S. but ended up in Ireland because they liked the Irish countryside and Irish corporate law. Both now live in London, and don’t rule out returning to Russia one day.

Why the world should care

It’s a cliche, but Russia is a place of contrasts. Alongside political repression and extreme cold, the country also generates stories that inspire people far beyond its borders. Unfortunately, sooner or later, the heroes of these stories all end up living abroad. The reasons for this are obvious — and few expect anything to change any time soon.

Luxury jet passengers left fuming after 14-hour delay

Roscongress Foundation

Roscongress Foundation

It was a nice idea. The organizers of this week’s economic forum in Vladivostok (which was attended by Putin) offered guests the opportunity to do the 7,400 mile round-trip on a private jet with flat bed seats and an open bar. Tickets cost just under $8,000. But it’s unlikely those who took up the offer will have many pleasant memories: the jet was delayed in Moscow for 14 hours, and only landed in Vladivostok an hour before the start of the forum. To the frustration of those on board, no explanation for the delay was given and no-one was talking refunds.

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