ZCZC
BCN-07
RUSSIA-BUSINESS-ECONOMY
Russian small businesses reopen to uncertain future
MOSCOW, May 31, 2020 (BSS/AFP) – When Moscow authorities closed non-
essential businesses to stop the spread of the coronavirus, Boris Kupriyanov
began to personally deliver books to his customers.
This, he said, has helped him and his indie bookstore survive over the past
two months.
“In many ways this has become our salvation,” Kupriyanov, co-founder of
Falanster, one of the country’s most famous independent bookshops, told AFP.
“We’ve kept going only because people wanted to buy our books and help us,”
he added.
Many small and medium-sized businesses including Kupriyanov’s bookstore
will be allowed to reopen on Monday as authorities gradually ease confinement
restrictions in Russia, which has reported more than 396,000 coronavirus
infections — the third-largest caseload after the United States and Brazil.
Not everyone will resume operations, however.
According to a study by the Center for Strategic Research in April, about a
third of Russian companies risk bankruptcy following a collapse in demand
fuelled by the epidemic.
Companies in the trade and services industries are among the hardest-hit,
the think-tank said.
While authorities have unveiled measures to prop up the economy, including
tax payment deferrals and interest-free loans, many small and medium-sized
businesses complain they pale in comparison with measures extended to
enterprises in the West.
Vladimir Gimpelson, head of the Centre for Labour Market Studies at
Moscow’s Higher School of Economics, said tax breaks and loans were of little
help for companies on the brink of bankruptcy.
“Deferrals are not a solution to the problem,” Gimpelson said in a recent
report, warning of a rise in poverty and inequality.
The Russian government has refused to tap into the country’s sovereign
wealth fund, which had assets worth $150 billion as of early March, and
instead ordered companies to continue paying their employees in April despite
the shutdown.
– ‘No major support’ –
“We have not felt any major support from the state,” said 47-year-old
Kupriyanov, sporting a salt-and-pepper beard and a small silver ring in his
left ear.
“This has been an ordeal and unfortunately for many companies it has become
fatal,” he added.
The crisis has dealt a major blow to Falanster — a treasure trove of
intellectual literature including small print-run books by little-known
authors.
Before the coronavirus struck, business had flourished and the shop had
just moved to bigger premises on Tverskaya Street in the heart of Moscow.
When operations ground to a halt in late March, staff launched a delivery
service.
Kupriyanov said he was grateful for the opportunity to stay in touch with
his customers, and the new tasks also helped him take his mind off the current
crisis.
“When you make 10 to 15 to 20 deliveries a day you simply have no time to
think about what’s happening,” he said.
– Over five million unemployed –
Economists say that even though authorities have tried to prevent mass
layoffs and bankruptcies, hundreds of thousands of people have found
themselves without an income.
“Unemployment has significantly gone up,” said Igor Nikolayev, director of
the FBK Grant Thornton Institute of Strategic Analysis.
According to the Russian statistics service, unemployment increased to 5.8
percent in April from 4.7 percent the month before — hitting the highest
level in four years.
Estimating the government’s total anti-crisis spending at $42 billion, The
Bell, an independent Russian-language media startup, said that authorities
could have “easily spent much more” but did not want to.
“Putin and the government prefer caution because of a traumatic experience
in the 2008 financial crisis when Russia burned through almost all its
reserves,” it said this week.
“They likely also want to save the money for a populist spending spree
ahead of the 2024 presidential election.”
Back at his Moscow store, Kupriyanov said he wanted to make a new website
and develop online sales after they reopen. But uncertainty, he said, bothered
him.
“We do not know whether Russians can still afford to buy books,” he said.
BSS/AFP/MMA/1130HRS