Hello! In our last newsletter of 2020, we pick the top six stories from the outgoing year — the trends, events or developments without which it would be impossible to understand Russia today. In top place, predictably, is the coronavirus pandemic, but we also recap constitutional changes that allow Putin to rule through 2036, the landmark poisoning of Alexei Navalny, unprecedented protests in Belarus, tumult for the oil market, and an increasingly vicious battle between corporate giants Sber and Yandex.
We hope you have enjoyed our newsletter this year, and you will continue to tell your friends and colleagues about The Bell — your support is vital. In the meantime, best wishes for 2021!
Russia’s coronavirus lockdown ran from March 30 to May 12. It was announced in a video recorded by President Vladimir Putin, one of a series of such statements. Putin promised that everyone who was unable to work due to the restrictions would receive a salary, but this had businesses tearing their hair out — the money for this came from them, not the state. Officially, the word ‘lockdown’ was never used: instead, the term was ‘non-working days’.
The impact of the virus was far-reaching. According to the official statistics, there were 54,000 deaths since March and more than 3 million infections. But there are doubts about the reliability of this data: many scientists point to anomalies suggesting the numbers were massaged. The way in which deaths are registered is also important: a death in Russia can only be attributed to COVID-19 after an autopsy, whereas in many European countries a doctor’s certificate is sufficient. In December, Deputy Prime Minister Tatiana Golikova said 81 percent of all excess deaths between January and November were a result of COVID-19, which would put the real death toll as high as 186,000 (the third highest in the world).
From March through May all shops (except for grocery stores, pharmacies and places selling essential goods), restaurants, and educational and cultural institutions were closed. However, outside of Moscow and St. Petersburg these restrictions were haphazardly applied. According to the World Bank, about 4 percent of Russian GDP was redistributed to support citizens and businesses — far less than in Europe, but on a par with China or Mexico. Many business owners complained that state support was insufficient, or inaccessible. In June, the restrictions were abruptly lifted. According to The Bell’s sources, this was essential to give people a respite before a referendum on constitutional reform.
The economy just about survived. In many cases this was not thanks to financial support from the government, but because about half of the economy is tied to the state. By the end of 2020 the fall in GDP will be about 5 percent, which is in line with the rest of the world. At the same time, Russian incomes fell 8 percent (much steeper than previous crises), and spending dropped 22 percent (comparable to countries like Italy where lockdown was much stricter).
At the same time, the pandemic gave Russia cause for political pride: the country registered the world’s first COVID-19 vaccine, Sputnik V. From the outset, there were questions about the drug, which was developed in a rush. But from the published results of phases I and II of the clinical trials, it appears the vaccine does produce antibodies when injected. A mass vaccination programme in Russia has been bedevilled by the low number of available doses and difficulties with scaling up production. In addition, many Russians are reluctant to have the injection because they don’t trust this vaccine, or vaccines in general.
At present, infection rates in Russia are higher than in the spring, but officials insist there will be no new restrictions. Clearly, they realize the economy would not survive a second lockdown.
Russia’s new constitution, which was approved by voters in July, enables Putin to remain in power until 2036. Of course, he insists he has not yet decided whether he will stand for election again, but there is little doubt he will continue to rule. If Putin remains in post for two more terms, he will have spent 36 years in power. In Russian history, only two rulers have reigned for longer: Ivan III (43 years) and Ivan the Terrible (37 years). They both lived in the 16th century.
The spirit of that distant era was discernible in the way the referendum on the reforms was initiated. In a parliamentary session, Duma deputy and the first woman in space, Valentina Tereshkova, suggested “publicly reviewing or even removing any limit on the number of terms a president can serve”. In a theatrical gesture, Putin allowed himself to be ‘persuaded’ by this argument. He said he would only agree to the changes because “the country faces such shocks and such difficulties.” Later, Putin explained that resetting the limit was needed so as not to “tear out our eyes in the search for a successor”.
The amendment on Putin’s term limits was bundled up with a bunch of other populist policies: for example, recognizing a family as the union of a man and a woman, and banning state officials from having a second citizenship. Due to the pandemic, voting took place over the course of a week. There were no independent election monitors and no significant protests over the result. Many blamed leading opposition figure Alexei Navalny for the lack of opposition as he urged his followers to boycott the poll. His position was simple: such a vote was illegal and taking part would only legitimize the result.
The poisoning of Navalny with nerve agent Novichok this summer is an event that will have a lasting effect on Russian politics. And the way that Navalny, along with investigative outlet Bellingcat, lured the poisoners into the open could easily be a Hollywood blockbuster. Thanks to the ease of acquiring personal data on Russia’s black market, Bellingcat and Navalny identified a group of chemical weapons experts in the security services with links to the attempt on his life.
Later, Navalny, posing as a secret service officer, went on to phone one of the suspects. The unsuspecting victim of the prank call explained why the plot failed (the efficiency of the doctors who treated Navalny and the prompt action of the pilots in charge of the plane he was on when taken ill) and explained how he and his colleagues worked in the “codpiece zone” – that is, smeared poison on Navalny’s underpants. It’s not difficult to imagine how quickly that became an internet meme.
Putin’s public statements were dismissive: “if they wanted to poison him, they would have finished the job,” he told journalists during his annual press conference. In reality, though, the opposition leader has seriously upset the authorities. A criminal case was opened against Navalny while he recuperates in Germany. He stands accused of fraudulent donations to his anti-corruption foundation and faces up to 10 years in jail if found guilty.
Protests in Belarus
Clean streets, a placid population and high-quality dairy products — that’s what most Russians associated with neighboring Belarus. This summer, everything changed.
The Belarusian August presidential elections were scripted to provide another victory for Alexander Lukashenko, whose authoritarian reign has lasted 26 years. But, for the first time in the country’s post-Soviet history, three independent candidates emerged (in previous elections, opposition candidates had been limited to marginal figures). Blogger Sergei Tikhanovsky, banker Viktor Babariko and IT director Valery Tsepkalo launched serious campaigns. Babariko and Tikhanovsky were arrested — they remain in prison — and Tsepkalo fled the country.
Instead, an election campaign was led by three women: Babariko’s chief of staff Maria Kolesnikova and the wives of Babariko and Tsepkalo (Svetlana Tikhanovskaya and Veronika Tsepkalo). Tikhanovskaya ran for president and, according to a tally by the opposition, she won 95 percent of the vote. The official results gave victory to Lukashenko with 80.1 percent.
When the election results were announced 9 August, Belarus was set aflame by protests on an unprecedented scale. Protesters were met with stun grenades and, according to some witnesses, military weapons. Hundreds were injured and several killed. Those arrested — there were up to 3,000 arrests in the first days — were treated brutally by police. The UN and Human Rights Watch recorded hundreds of cases of torture and violence.
Since then, the population and the authorities have been living in parallel universes. For the last five months, Belarusians have taken to the streets once a week for mass protests and thousands have left the country. Lukashenko staged a secret inauguration, threatened protesters with a machine gun and fueled wild conspiracy theories. Europe and the U.S. do not recognize him as president, while Russia reluctantly loans him money. The contours of a relationship between Minsk and Moscow going forward are unclear. It’s believed that, at a September meeting, Putin and Lukashenko agreed there would be constitutional reform in Belarus. But — so far — there is no evidence of this happening.
As the coronavirus pandemic was taking hold in spring, Russia inflicted a heavy economic blow on itself. At a meeting of the OPEC oil cartel, Energy Minister Alexander Novak spoke against caps on oil production intended to protect prices. As The Bell later discovered, the powerful head of state-owned Rosneft, Igor Sechin, may have had a hand in this decision.
In the week after that meeting, oil prices crashed 30 percent, and Russia embarked on a price war with Saudi Arabia. However, within a month, amid the chaos caused by the coronavirus, the curtain came down on this geopolitical performance: Russia signed a humiliating peace with the Saudis, the OPEC+ format reconvened, and record limits on oil production were agreed.
But it was too late: the whole world had already gone into lockdown, demand for oil was flatlining, and OPEC no longer had a meaningful role. On April 20, futures on the U.S. oil blend WTI plunged into negative territory for the first time in oil market history. Although this sudden crash was largely due to technical reasons, the problem of oversupply was real. The Russian Urals oil blend sunk to 1999 price levels. In December, oil — still Russia’s primary source of wealth — returned to $50 a barrel, but the events of this year mean it looks like OPEC’s reign may be coming to an end. Even the cartel acknowledged for the first time that global oil demand will soon peak. For the Russian economy, this is an alarming prospect.
Battle of the ecosystems
Russian corporations are desperate to be more like their Chinese counterparts and have been building entire ecosystems offering dozens of different services. The main aim of this is to get into the wallets of Russian consumers. The two biggest players are the country’s biggest IT company, Yandex, and its largest bank, which recently rebranded itself as Sber.
Their rivalry did not begin this year but it has dramatically taken shape in recent months. In June, the companies ended an attempt at an official partnership, and divided their assets. Now these ex-partners, if not sworn enemies, are fierce competitors.
Each is attempting to build its own Russian versions of Amazon, Uber and Netflix. The rest of us can get out the popcorn as this looks set to be one of the bloodiest battles in Russian corporate history. Who will win? A state-owned bank like Sber has practically unlimited resources (almost every Russian is already a client in some way), or the country’s oldest IT company that remains in private hands despite much state interest? We may get an answer in 2021.