With small businesses suffering, Putin faces criticism over shutdown

By Tom Balmforth and Anton Zverev

MOSCOW (Reuters) – Left with no income because of the coronavirus lockdown, Dmitry Volodin, the co-owner of several bars in Moscow, says he’s getting inadequate government support, and he has no idea how he can keep paying his staff and his rent.

President Vladimir Putin last week gave many Russians the rest of the month off, to stem the spread of the novel coronavirus, but said employers must keep paying staff. Many regions have gone into lockdown, ordering residents to stay home.

“They say ‘pay the salaries’, but no one explains where you’re supposed to get the money from,” Volodin said. “It will kill the (restaurant and bar) sector. Many of them won’t survive.”

Small and medium-sized businesses have voiced anger and warned of mass bankruptcies in petitions to the government, including one with more than 250,000 signatures, illustrating the headwinds Putin faces as he tries to counter the virus.

Critics point to how other countries have offered to pay workers; Britain, for example, pays up to 80% of wages. They also note Russia’s huge gold and forex reserves, around $550 billion.

Putin’s approval rating remains high, but it fell last month from 69% to 63%, near where it stood before Russia annexed Crimea in 2014, an event which sent his ratings surging, according to the Levada Centre.

Compounded by the collapse of oil prices, anger from businesses comes at a delicate moment for Putin. He is pushing through constitutional reforms that would allow him to run for president again and, potentially, extend his rule until 2036.

“This is a very serious political challenge for Putin,” said Andrei Kolesnikov, a political analyst at the Moscow Carnegie Centre.

“He has just lost that class, some of which supported him, some of which didn’t – the people in the private and competitive sectors. These people are probably not going to support him anymore.”

‘TEARFUL’ OUTLOOK

Putin on March 25 announced a nationwide week off for many and said small businesses would be allowed to pay less national insurance for staff and to defer tax payments and, in some cases, loan repayments for six months. http://en.kremlin.ru/events/president/news/63061

“Of course, this won’t help us survive. It will only be of help to those who survive. A moratorium on rent is what we need and there isn’t one,” Volodin said.

Putin then extended the holiday for the rest of April and said salaries must be paid.

An online petition with more than a quarter of a million signatures reads: “The finance ministry is sitting on a pile of money, while business is going into bankruptcy and the population is becoming impoverished.”

A joke doing the rounds online goes: “Putin walks into a bar and orders everyone a beer – on the house.”

Asked about worried entrepreneurs on Friday, the Kremlin said the situation was unprecedented and changing rapidly, but that businesses should tap support measures such as tax holidays that had already been made available.

“The government is of course monitoring the situation not so much every day as every hour, and depending on how it develops, a scenario of support measures will be built up,” Kremlin spokesman Dmitry Peskov said.

On Monday, the government announced a 150 billion-rouble programme under which banks will offer interest-free loans to small businesses to pay salaries.

But that has done little to calm people like Dariya Kaminskaya, the owner of a car repair shop where work has dried up. She says she had already had to pay her seven employees out of her own pocket.

“This is how revolutions were started in the past, beginning with the proletariat,” she said. “The outlook is tearful.”