A customer at a checkout lane of the IKEA furniture and homewares store in Khimki. Source: Mikhail Pochuyev / TASS
I commence writing this article as I take off from Heathrow to go to St. Petersburg for a week of authentically Russian winter wonderland, snow, borsch, and… some shopping of course. With the Russian ruble down 50 percent I would be mad not to include a “quick” five-hour stop at one of the malls in my otherwise deeply cultural calendar.
With the Russian currency currently enduring a serious slump, this London writer finally has an excuse to switch into #MoscowGirl mode and stock up on some fancy heels, handbags and dresses. That is if I am lucky enough, as there might be nothing left on the shelves by the time I reach the TsUM shopping arcade…
The ruble falls, GDP grows
Apparently, the queues in shops all over Russia have outpaced the pre-Christmas madness of “Panic Saturday” in London, as Russians race to buy furniture, jewellery, electrics, cars and other durable goods, reports the Financial Times (FT).
Far from being a collective feat of shopaholism, the trend represents the middle class’s rather tragic last-resort measure against the currency’s abrupt depreciation. On Dec. 19 alone, the ruble ended the day at 11 percent down with a 20 percent dip at the lowest point, causing a wave of panic across Russian households. Many babushkas rushed to withdraw their pensions from savings accounts and exchange them into euros and dollars, causing a three- to four-fold jump in demand for foreign currencies and a further erosion of confidence in the ruble.
“None of us know what’s happening. We’re all worried that the currency will keep falling”, retiree Galina told FT while queuing at Sberbank, Russia’s largest bank. Wealthier Russians prefer to greet the New Year in style and are stocking up on high-end western brands, diamonds, cars, and even apartments.
“Retail demand has been extraordinary in recent weeks,” FT quotes Joerg Schreiber of the Association of European Business (AEB) as saying, though this upward trend will hardly be long-lasting. December’s shopping spree in Russia may become the swan song of the Russian economy as it heads towards recession in the next year, strongly discouraged by the “misbehaviour” of the oil price.
And if Russia’s middle class, now queuing for buckwheat and TV sets, will unquestionably suffer from the upcoming crisis, the richest Russians are apparently being hurt too. According to Bloomberg’s Billionaires index, Alisher Usmanov, Russia’s second-wealthiest man, has been among those hit hardest by last week’s collapse of the ruble, with the Uzbek-born billionaire losing $809 million (£517 million) over two days while Chelsea’s Roman Abramovich lost nearly $450million.
The Russian currency drop has led to a total of $10 billion being wiped off the oligarchs’ collective fortunes, reported Bloomberg on Dec. 17 – however, if I were Bloomberg, I wouldn’t worry too much: The current rating as of today reveals that many of the beloved Russian oligarchs have already regained, if partially, their positions, with Usmanov’s fortune climbing back up to $13.8 billion since last week.
Celebrate with Kim
As Brezhnev-style queues and empty shelves in wintry Moscow will undeniably prompt some nostalgia for the good old days, it seems like a great moment to get in touch with some old friends too. Perhaps Vladimir Putin thought so too, as he invited the North Korean leader Kim Jong-un to visit Moscow, we read in UK newspaper The Guardian – right amidst the pile of news surrounding the infamous Sony hacking scandal that put North Korea in the spotlight this week.
North Korea’s leader may travel to Russia on May 9 to mark the 70th anniversary of the Soviet defeat of Nazi Germany in World War II. Military parades will be held in 26 Russian cities, and about 14,000 members of the Russian armed forces, 194 tanks and 150 planes and helicopters are expected to participate in the Victory Parade on Red Square.
In the Guardian’s assessment, Moscow needs Pyongyang’s cooperation to boost its natural gas exports to South Korea via a new pipeline that Gazprom is planning to build, and in return Pyongyang is seeking support from Moscow against international criticism relating to accusations of human rights abuses and its nuclear programme. Moscow may indeed be gaining substantial experience in dealing with these kinds of issues, so its expertise might be of great value for the communist state.
Notably, a visit to Russia would be Kim’s first official foreign trip since coming to power in 2011. Putin, on the other hand, went to North Korea earlier this year, in a first-ever visit by either a Russian or Soviet leader to the country.
In the meantime, U.S. President Barack Obama has rejected an invitation to visit Russia for the Victory Day celebrations, and will miss the grand show. "At this time, the president has no plans to travel to Russia in the near future," Mark Stroh, a National Security Council spokesman, told the Sputnik news agency on Dec. 22.
Obama who is going to miss this grand show, was also unable to attend the 65-year anniversary in 2010, but perhaps the 75th anniversary in 2020 will finally be a good year to visit?
Tax vs. pets
To finish off this week’s report, we bring to your attention the curious case of a pedigree cat and a taxpayer, as reported by BBC News. Tax collectors in Russia have come up with a new way of getting people to pay their debts - by threatening to take away their cats, reports the news organisation.
Taxmen in Novosibirsk have recently succeeded in getting a resident to pay 12,000 rubles (£138) he owed in taxes after threatening to confiscate his expensive pedigree cat. Upon arriving at the student’s flat, they found nothing worth seizing until noticing the British Shorthair cat he was holding and three of its kittens running around the place.
Apparently, this is far from being a sole example of animal expropriation: In one case, bailiffs in the Siberian region of Tomsk placed four pedigree Scottish Fold kittens "under arrest," whilst in another instance in Krasnoyarsk they confiscated a British Shorthair cat and a fluffy pet rabbit.
The tax vs. pets debate, however, dates much further back in history and goes back as far as 18th century England. In 1796, the English government, desperate for money to finance an ongoing war with France, introduced a Dog Tax, which imposed a duty on owners of canines.
The new law enraged many dog owners at the time, not simply because of the financial aspect of the issue but because of the sensitive nature of the human-dog relationship. The tax caused a stir and raised serious debates about the moral implications of having a pet, going far beyond the mundane financial aspect, but was imposed nevertheless and stayed in place until 1882.
The opinion of the writer may not necessarily reflect the position of RBTH.
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