Russia on the Ground – February 2019

Tatyana Bakalchuk, the owner and founder of Russia's biggest online store Wildberries, is Russia's second female billionaire.

This resource serves to track domestic news inside Russia – focusing primarily on demographics, public opinion, economy, and major domestic political events inside Russia.

It is intended to give students who are otherwise following major issues and events within Russia greater context from which to view those issues and events. This resource lists useful but often under-reported information that can help build a pragmatic and objective view of Russia’s domestic situation.



Having an Honest Business Is Not Possible in Russia, Majority Says
A majority of Russians say that doing business in the country without breaking a few rules is impossible, according to a newly released state-funded survey.

Most citizens oppose handover of Kuril Islands to Japan: opinion poll
96% of the locals believe that Russia should not hand over the Kuril Islands to Japan, the poll states.

Growing Number Of Russians Believe Country ‘On The Wrong Course’
A new opinion poll shows more Russia believe their country is moving in the wrong rather than the right direction, a first since 2006.



Putin Has a Multi-billion Dollar Plan to Modernize Russian Cities
The Kremlin is still capable of delivering positive changes despite a struggling economy.

The Kremlin appoints an experienced head to run Russia’s state rubbish disposal company
In a sign of how seriously the Kremlin is taking the demonstrations against smelly landfills last year, the state has set up a national rubbish disposal company and Prime Minister Dmitry Medvedev appointed Denis Butsaev as its head, the Kremlin announced on February 19.

St. Petersburg’s Dam Is Holding Back the Floods, for Now
Russia’s second-largest city is in a race against climate change.



Putin’s ‘Great Society’ program: Russian government outlines 12 major National Projects
The Russian government has published information about all the 12 National Projects, which are going to be implemented up until late 2024.

Surprise Russian Growth Surge Raises Doubts About Economic Data
Russia’s Federal Statistics Service said the economy grew at the fastest pace in six years in 2018, outstripping estimates from economists, who voiced skepticism about the accuracy of the data.

Moody’s raises Russia’s rating to investment grade
International ratings agency Moody’s Investors Service has upgraded Russia’s rating to investment grade, returning the country to a hat trick of investment grades from the leading ratings agencies.

Russia’s inflation accelerated to over 5% for the first time in two years
Russian inflation accelerated in January by 1% after an already higher than expected 0.8% in December to bring the annualised rate from 4.3% at the end of 2018 to over 5% for the first time in two years and well ahead of the Central Bank of Russia (CBR) 4% target rate, Rosstat reported on January 6.

Russia’s Growth Expectations Fall Back to Earth
The economic data for 2018 were surprisingly rosy. The outlook for this year is sharply less upbeat.

Russia, Back From The Brink
All three American credit rating agencies have Russia at investment grade again, which means U.S. bond funds that are mandated to only invest in investment-grade debt can now get back into Russia.

Sentiment on emerging markets and Russia turning as EM funds have second biggest inflows ever
After a terrible year in 2018 sentiment towards emerging markets (EMs), and Russia in particular, seems to be turning more positive after EM bonds funds had their second best week on record in terms of inflows and equities also attracted new money, Slava Smolyaninov, executive director, chief strategist of BCS Global Markets, reports.

Putin Prepares for New Cold War with Tight Economic Policies
The Russian President has quietly built a financial fortress.

Moody’s mentions “unorganised regime change” for the first time in Russian ratings note.
For the first time, Moody’s Investors Service named “unorganised regime change” as one of the risks for the Russian economy in a ratings note on February 23.

Fear And Loathing In Russia’s Dying ‘Las Vegas’
For several years, things were looking up for Viktoria Mityushkina and her family in this southern village on the shores of the Azov Sea — mainly thanks to the gamblers flocking to the barren steppe just up the road.

Russia Risk: It’s a Feature, Not a Bug
In a story both typical of Russian business practices and so unusual as to bring a response from Putin’s key business allies, the American investor Michael Calvey and his colleagues were arrested last week on fraud charges.

– Business

Vezet is Russia’s second largest taxi service battling it out in a cutthroat market
Russia’s taxi business has become ultra-competitive. Already running for several years, the incumbent Yandex.Taxi subsidies its drivers and won’t go into profit until maybe this year. It has already forced Uber into a merger and may IPO in the next two years.

Russian e-commerce operators drive warehousing demand as retail is transformed
Russia’s booming e-commerce sector could account for 25% of warehouse space leases in 2019, Vedomosti reported on February 5.

Russian government goes full circle on allowing kiosks to sell goods
In the first years following the collapse of the Soviet Union, kiosks sprouted up in cities across Russia like mushrooms after the rain. With most of the big Soviet stores bankrupt the kiosk became the main conduit of retail, stocked by the “suitcase traders”, individuals that flew abroad and filled their suitcase with hard-to-find products in Russia that they sold through a kiosk.

Russia gets a second female billionaire
Moscow has more billionaires per square kilometre than any other city in Europe, but they are almost all men. Almost. But not quite.

Russian central bank meeting Vostochny Bank minority investors
Russia’s central bank is meeting Vostochny Bank minority shareholders following the detention on fraud charges last week of its majority U.S. investor, a banking source and a senior Russian official told Reuters on Wednesday.

Russia’s Sberbank may acquire or refinance Rambler’s debt
Russia’s state-owned retail bank Sberbank is in talks to buy news and media group Rambler, although the rumors were denied by Sberbank and Rambler.

Putin backs the FSB in the Calvey case because he needs to
Putin is in a trap of his own making. Russia’s investment community is in furore as the liberal fraction of the Kremlin, that actually runs the macroeconomic and reform processes, called on the president to intercede following the arrest of US fund manager Michael Calvey, Russia’s best known and most successful foreign investor, on February 14.

Russia’s New Shield From U.S. Sanctions: A Siberian Gold Mine
Beneath this plot of land in southeastern Siberia lie vast stores of gold, according to Russia’s biggest gold producer, Polyus PJSC, and tapping them could provide the Russian central bank with a huge and nearly sanction-proof backstop for its currency.

– Banking and Finance

Russian central bank keeps monetary policy rate on hold at 7.75%, outlook for modest rises in inflation in 2019
The Central Bank of Russia (CBR) kept monetary policy rate on hold at 7.75% at its regular meeting on February 8, saying that inflationary pressures are under control despite a recent rise in prices.

Mike Calvey, founder of top Russian private equity fund Barings Vostok and Russia’s most famous fund manager, arrested on fraud charges
Michael Calvey, the founder of Baring Vostok, Russia’s biggest and most successful private equity fund, and often referred to as the most famous fund manager in Russia, was arrested on February 14, according to reports.

Sberbank retakes Russia’s equity King of the Castle title
Russia’s state owned retail banking giant Sberbank is back on top as Russia’s king of the castle – the most valuable stock on the Russian equity capital market, worth a massive $69.4bn as of February 22.

International investors withdrew almost $130mn from the Russian stock market last week
International investors withdrew almost $130mn from the Russian stock market last week – the biggest outflow in three months and reversing the previous inflows on the back of improving sentiment towards emerging markets (EMs) in general, reports Kommersant, citing Emerging Portfolio Fund Research (EPFR).


Policy and Conflict Post SovietPolitics

Reshuffling of Governors
Over half of Russian governors have been replaced by the Kremlin in the past two and a half years. A large share of these new regional leaders are “outsiders,” individuals with no roots in or experience with the territories that the Center has entrusted to them. This policy alienates regional elites and may even lead to the radicalization of local politics, says Alexander Kynev, Russia’s leading expert on the regions.

The Iron Lady of Siberia
How an indigenous, female opposition candidate became Russia’s most popular mayor.

Russian “Sovereign Internet” Bill Attacked Over Censorship Risks
Russian lawmakers criticized a draft law aimed at creating a “sovereign internet,” warning that it risked handing the government extensive powers to censor online content.

Russia in 2019 and What Lies Ahead
What can we expect for Russia in 2019 and beyond? At a recent policy workshop held by the Washington, D.C.-based PONARS Eurasia network, scholars and analysts addressed this broad question and related issues, including the outlook for Vladimir Putin’s fourth term as president, the expected impacts of sanctions and some aspects of Russian foreign policy.

Putin Is Finally Ready to Look Homeward
But his plans to improve ordinary Russians’ lot face formidable obstacles of his own making.

Putin’s 2019 State of the Nation address, in a nutshell
Vladimir Putin has delivered yet another annual address to Russia’s Federal Assembly (a speech similar to the U.S. president’s State of the Union Address).

COMMENT: Putin delivers a homely state of the nation speech
It took Russian President Vladimir Putin an hour to get to the international issues as his state of the nation speech focused on the political issues that are pressing on the Kremlin today – the miasma that has fallen over the Russian population as the gradual economic recovery of the last year fails to trickle down to the street and made people’s lives better.

Presidential Address to the Federal Assembly
The President of Russia delivered the Address to the Federal Assembly. The ceremony took place at the Manezh Central Exhibition Hall.

When Putin goes, will Putinism persist? Russians debate.
When the Kremlin’s ex-chief ideologist speaks, people listen. Last week, he said that the governmental structure that Putin built would outlive the man who built it. Now Russians are arguing over what “Putinism” is.

The Kremlin Hierarchy Is Fast Decaying
A scramble of all against all will define Putin’s last presidential term.



Abortion in Russia: How Has the Situation Changed Since the Soviet Era?
Soviet women commonly resorted to abortion as a way to end unwanted pregnancies. In the post-Soviet decades, the emergence of a market economy, the availability of modern contraceptive methods, and increased knowledge about contraception have all contributed to improving sexual culture.

Russian Demographics in 2019
The population was estimated at 146,793,744 as of Jan 1, 2019, down from 146,880,432 exactly one year ago. This implies about 131,706 in long-term net immigration, down from 172,551 last year.


Daily Life / Civil Society

Facebook and Google’s Russian rivals: Why are they winning?
Russia has some corporate tech and lifestyle giants of its own, able to rival the likes of Google and Facebook efficiently. How do they corner so much of the market?

Krasnoyarsk Goes All Potemkin
Can you create a Potemkin village in the age of the internet? You can certainly try… Witness the actions of authorities in the Siberian city of Krasnoyarsk.

Google’s Reported Decision to Delete Search Results a “Troubling Sign of Capitulation” to Russian Censorship
On Wednesday February 6, Russian paper Vedomosti (“The Journal,” in English) reported that Google had begun complying with Russian regulators’ demands that the company remove search results linking to sites that are banned within the country.

About the Author

Gregory Tracey

Greg Tracey is a junior at the University of Nebraska – Lincoln. He is studying economics and international relations, as well as minoring in mathematics and Russian. As a Home and Abroad Scholar, he is focusing on business and economic issues in Russia and surrounding countries. The related scholarship will help fund his participation in SRAS's Russian as a Second Language program at St. Petersburg State University of Economics during the Spring 2019 Semester. In his free time, he enjoys reading and soccer.