[Marxism] Russians’ Anxiety Swells as Oil Prices Collapse

Louis Proyect lnp3 at panix.com
Sat Jan 23 07:06:03 MST 2016


NY Times, Jan. 23 2016
Russians’ Anxiety Swells as Oil Prices Collapse
By NEIL MacFARQUHAR

KRASNODAR, Russia — Last year was bad enough financially for Sergei and 
Victoria Titov, both music teachers getting along in years. Her 
government salary was slashed by one third, and rampant inflation put 
some basic groceries like eggplant and cucumbers out of reach.

Then came Jan. 1, and the abrupt decision by the regional government 
here in Krasnodar, the capital of Russia’s southern agricultural 
heartland, to chop transportation subsidies for older Russians, forcing 
the couple to limit their trolley rides.

Indignant and fearing worse amid Russia’s accelerating economic 
problems, Sergei joined an unauthorized demonstration last week by 
hundreds of older Russians who gathered under the bronze statue of a 
Cossack horseman on the main square here and chanted, “Return our benefits!”

They were not alone, neither in Krasnodar nor across this vast nation, 
where illegal protests and wildcat strikes are erupting with increasing 
frequency by truckers, teachers, factory workers and all sorts of 
Russians facing steep government cutbacks because of plummeting revenue 
from oil and gas.

The global collapse in oil prices is reordering economic relations 
around the world, but the change is particularly daunting for Russia, 
which relies on energy exports for 50 percent of its federal budget.

In December, President Vladimir V. Putin told the nation that the worst 
of the recession — the economy shrank 3.9 percent and inflation hit 12.9 
percent in 2015 — was over and that modest growth would return in 2016. 
He has been pushing the oil collapse as an “opportunity” that will wean 
Russia off energy imports and diversify the economy.

Then in January oil fell below $30 per barrel, with no bottom in sight, 
and the ruble hit a record low of nearly 85 to the dollar before 
recovering slightly.

The last time oil prices dropped so low and stayed there, in the 1980s, 
the Soviet Union disintegrated. Steadily rising prices since 2000 have 
lifted Russia out of poverty and economic chaos, buoying the prosperity 
of many Russians with it. Mr. Putin was lucky enough to be president for 
much of that period, but he now faces an extended decline, with real 
incomes shrinking.

With the federal budget approved in December based on oil at $50 a 
barrel, Anton Siluanov, the finance minister, announced that the country 
faced a budget deficit of about $40 billion, and ministries were ordered 
to cut spending 10 percent. Budgets were similarly guillotined last year.

In Krasnodar, Mr. Titov, 64, braced for harder times. “I do not know 
what they will cut, but I know it will affect us,” he said. “We are 
watching all this with alarm. It is clear that the government lacks the 
necessary resources to give us a normal life.”

In Krasnodar, a city of about 800,000 people, retirees register a kind 
of sticker shock when discussing food prices, yelling out items as they 
remember newly high prices. “Apples!” one shouted, noting that the cost 
had nearly doubled. Then “Zucchini!” Then “Smoked sausages!”

Food prices rose 20 percent last year, according to official statistics, 
but often Russians say their grocery tab is up by a third or more, 
thanks in part to sanctions Moscow slapped on Western food imports in 
retaliation for sanctions the West imposed over Ukraine.

Sergei Galustian, 65, a retired police officer, lives on a downtown 
street with just 27 houses, their proximity making it easy to assess change.

“Nobody is starving yet, but incomes are definitely down,” he said, 
noting that homes are colder, that neighbors turn on just two lamps 
after dark where they once used five and that people have stopped buying 
new clothes. Retail sales across Russia were down by 13.1 percent for 
the year ending in November, according to official statistics, with car 
sales off nearly 40 percent.

The 100 or so workers at the giant Seydin Machine Tool Factory, once the 
pride of the city during the Soviet era, have not seen a paycheck for a 
year and recently received layoff notices. They, too, have on occasion 
gathered in the main square to demand their back pay. The workers “have 
to take to the streets!” they wrote in an open letter to Mr. Putin.

In a tradition dating from Soviet times, most firms, and especially 
state-run companies, tend to cut hours or stop paying salaries rather 
than fire people to diminish the chances for social unrest.

In Moscow on Wednesday, about 15 employees of Sbarro, the pizza chain 
based in Ohio, stood in the brutal cold outside one franchise holding 
signs saying, “Give us our money.” Several said they had not been paid 
for at least three months.

“They just tell us they have problems,” said Sergei Yudichev, 50, a 
driver for the chain for more than two years.

Albeit poorer, Russia remains a petro state, so there are pockets of 
plenty. Rolls-Royce reported a 5 percent jump in sales last year, the 
rich splurging as the value of their assets nose-dived.

Others just seemed oblivious. Moscow’s City Hall advertised for tenders 
for its banquets, noting that menu items should include foie gras and 
Parma ham (which is banned elsewhere in Russia because of sanctions).

Social media erupted in mocking resentment. One Russian quoted a famous 
line by the Russian poet Vladimir Mayakovski from the 1917 revolution, 
“Eat pineapples, munch your grouse!” and left unstated the second line, 
“Your last day is coming, bourgeois!”

Russia pumped record amounts of oil last year, nearly 11 million barrels 
per day, but that pace will not save it in the current global glut. The 
main government strategy so far seems to be to cut spending and to rely 
on its reserves until oil prices improve.

Russia has around $360 billion in foreign currency reserves and some 
$120 billion in two rainy day funds, down from just under $160 billion a 
year ago. At current spending rates, however, the two funds are expected 
to last only 18 months. It might also sell significant stakes in 
state-run companies like the oil giant Rosneft or Sberbank, and it will 
not increase military spending.

Mr. Titov, a veteran organizer for the Communist Party, said he felt the 
economic problems were contributing to a corrosive sense of drift. 
“Russia always lived with some manner of national idea, a goal: We were 
building socialism and communism,” he said. “But there is no national 
idea. Now, we just go with the flow and it is not clear in what direction.”

Russian involvement in wars in Ukraine and Syria has swelled the general 
whirlpool of anxiety, with the possibility of a global war discussed on 
state-run television. Some analysts accuse the Kremlin of deliberately 
seeking overseas adventures to distract people from domestic economic woes.

“People are more alarmed and more tense, because now we are speaking not 
only about their well-being, but their lives in general,” said Valery 
Fedorov, director general of the government-owned Russia Public Opinion 
Research Center, known by its Russian initials, Vciom.

Many analysts expect people to do what Russians always do in hard times 
— hunker down, tend to their vegetable plots and wait it out. Others say 
that Russians have gotten used to a higher standard of living and that 
they will protest losing it.

The government allows street protests over issues like lost wages, but 
its distinctly authoritarian edge emerges in the face of political action.

ocal governments have reacted lightly to the protests. The governor of 
the Krasnodar Region restored transportation passes for the older 
Russians receiving the lowest pensions.

Some residents, like Mr. Titov, groused that the wealth was being wasted 
on prestige projects rather than helping ordinary people. Still, he does 
not expect Russians to sour on Mr. Putin any time soon. In nearby Sochi, 
Russia spent around $50 billion to host the 2014 Winter Olympics, and a 
similar construction juggernaut is building stadiums nationwide for the 
2018 World Cup.

“The Russian people got what they wanted, a czar ruling the country,” he 
said of Mr. Putin. “What we need is an effective manager, but what we 
got is the Olympics, soccer and war.”

Alexandra Odynova contributed reporting from Krasnodar, and Ivan 
Nechepurenko from Moscow.



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