On 2 April, Russian president Vladimir Putin extended the non-working holiday for Russians from the earlier announced 5 April to 30 April, in response to the rapid rise in positive COVID-19 cases in the country. On the day of the announcement, Russia witnessed its biggest one-day rise in cases by 771, with total number of cases reaching 3548 and 30 deaths recorded. As Putin has himself noted, ‘global peak of the epidemic is still ahead of us, including in Russia.’ A month ago, Russia had reported its first citizen testing positive after returning from a trip to Italy.
Since then, the situation has evolved resulting in a presidential executive order granting additional authority to the governors to take measures to deal with the pandemic. Quite unlike the top-down Russian decision-making system, this decree means regional leaders will take decisions based on variations in spread of coronavirus. Also, the constitutional referendum slated for 22 April, which could allow Putin to run for a fifth term in office after 2024 has now been postponed.
On the day WHO declared COVID-19 a pandemic on 11 March, Russia's total number of cases stood at 28. Since then, there has been a rapid rise in cases. For instance, in India, the number of cases on 11 March stood at 60. By 2 April, cases in India and Russia had reached 2069 and 3548 respectively. There has been concern about adequate testing, given that January 2020 saw a 37 percent rise in number of pneumonia cases being reported, leading to speculation of misdiagnosis. The timing of social distancing and partial lockdown measures has also been under the scanner for being delayed.
Earlier, Russia had taken swift action by closing its 4300-kilometer border with China in early days of the pandemic and introducing medical check-ups at the airport for flights from severely affected countries. As of now, Russia has not introduced domestic travel restrictions even though international traffic stands suspended since 27 March.
While Moscow leads the country in total number of COVID-19 cases, several regions are now reporting positive cases. Given that health facilities in main cities and remote regions vary to a large extent, concerns remain in case of a larger spread beyond major cities. Local medical professionals in certain areas have complained about lack of adequate supply of personal protection equipment. Russia’s current health expenditure as percentage of gross domestic product (GDP) stands at 5.34 percent, which is lower than that of several other western countries.
However, it does have certain advantages when it comes to dealing with the impending crisis. In comparison to other major countries dealing with COVID-19 outbreak, Russia scores well on basic indices. For instance, it has the seventh highest number of hospital beds per 10000 population in the world at 81.75 while its number of medical doctors per 10000 is also at par/better with the western world.
Table 1: Number of hospital beds (per 10000 population)
Table 2: Number of doctors (per 10000 population)
It is also believed that if needed, Russia will be able to ramp up its capacity of hospital beds and PPEs due to its historical legacy and experience of dealing with infectious diseases. Russia has a higher number of ventilators per capita than many western countries and the government has insisted it has over 40000 ventilators besides adequate supply of medicines and PPEs.
While dealing with a health emergency, Russia will have to simultaneously deal with the economic recession that is now a foregone conclusion. Some estimates suggest Russian job losses will touch a figure between 7 – 10 million. It is unclear how small and medium businesses – which employ 40% of the Russian labour force – will fulfill the directive from the Kremlin to pay the employees with no revenue stream due to work closure. Already, there are calls for further help from the government, with the existing economic package announced on 25 March valued at 1.3% of the GDP. This includes an increase in unemployment benefits, aid to SMEs through loan grace periods and subsidized loans for businesses, retailers and distributors. As of now, this is estimated to cost 300 billion rubles.
The global recession could not have come for a worse time for Russia which was already dealing with a slowdown having grown only 1.3 percent in 2019 and real incomes stagnating for six consecutive years. There were some positive signs in 2019, when real incomes grew by 0.8 percent, only to be dealt a blow by COVID-19.
Other area of concern has been the drop in oil price due to falling demand as the pandemic has forced a virtual shutdown of major economies. The prices were already falling as Russia declined to go ahead with an OPEC plan in early March to cut oil production and shore-up prices. This decision was based on the calculation that Russia could handle lower oil prices for some time – while hurting the US shale oil industry that needs prices at around $50 a barrel and getting access to new markets. The government had earlier noted that with oil at $30, the Russian budget could go on for four years by using the reserves of sovereign wealth fund that stands at $150 billion. While the budget for 2020 had been planned based on Urals crude at $57 and ruble at 65.7, the depreciation of ruble allows for ‘break-even oil price even lower’ as the revenues earned are in dollars.
But it is estimated that if the average oil price stays at around $39, the GDP will shrink by 1% in 2020. With economic misery only set to rise, as Russia extends its non-working week to a month, it has now indicated willingness to engage in talks with the US and OPEC regarding an oil supply cut in the coming days. Russia needs to shore up its revenue stream especially given that the federal government will be looked upon in the coming days to ease economic distress. This would mean additional economic stimulus package leading to borrowing from the reserve fund as well as gathering finance via new taxes proposed by Putin on funds transferred abroad and bank deposits.
While debate is ongoing about whether authoritarian leaders have proven more successful than others in dealing with the pandemic, the effectiveness of response has varied across the board. While some democracies have fared exceptionally badly, those like South Korea, Germany, India among others have taken more proactive steps. There is also no direct causal link between authoritarian leadership and effective response to COVID-19 as yet.
What the crisis has done is expose the fault-lines within the western world and raised questions regarding its leadership role in the world order. It has also simultaneously raised questions about Chinese global leadership given its role in the spread of the pandemic and the manipulation of organizations like the World Health Organization (WHO). While it is too early to predict the contours of the world order post the COVID-19 crisis, it is clear that states will have to focus inwards as they deal with the immediate economic crisis emerging from the pandemic. This might fuel the ongoing trends in the world of de-globalization, strengthening of state power and nationalism. But given the stakes involved, the ongoing great power rivalry is unlikely to go away any time soon. Whether it prompts like-minded states to come together to deal with the China question or reassert control over multilateral bodies remains an open-ended question. The Chinese response to turn the tide in its favour through its economic influence will also have to be watched.
Russia will thus have to navigate its foreign policy goals in the midst of this uncertain international situation arising from the pandemic while also dealing with an unprecedented economic crisis that will put strain on its resources like never before. If the Russian economy faces prolonged downturn, its geopolitical position will be eroded and negatively impact its ability to implement its ambitious foreign policy goals.
It seems unlikely that Russia would engage in a blame-game over the spread COVID-19 given its close political and economic ties with China as well as the pragmatic policy it follows when it comes to the rising power. However, it would like to exploit the bungled response of leading western powers to the pandemic to drive home its idea of a multipolar world order not dominated by those espousing a liberal ideology. Moscow would have to evaluate if the post 2014 breakdown of relations with the West and the resulting sanctions will further exacerbate the pain of the recession and if the current situation offers an opportunity to recalibrate the ties. But before any of that happens, Moscow will have to focus all its energies on dealing with the pandemic, whose end is currently nowhere in sight.
The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.
Nivedita Kapoor is a Post-doctoral Fellow at the International Laboratory on World Order Studies and the New Regionalism Faculty of World Economy and International Affairs ...Read More +