Tuesday, August 04, 2020

Pandemic tanked Russian economy, plunged families into crisis

Jul 03. 2020
Yekaterina Gorbunova and three of her four children hang out near her mother-in-law's house outside Moscow on June 24, 2020. MUST CREDIT: Photo for The Washington Post by Oksana Yushko
Yekaterina Gorbunova and three of her four children hang out near her mother-in-law's house outside Moscow on June 24, 2020. MUST CREDIT: Photo for The Washington Post by Oksana Yushko
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By The Washington Post · Robyn Dixon · BUSINESS, WORLD, ASIA-PACIFIC, EUROPE 

 MOSCOW - She still has her dreams: to raise a doctor, an engineer, a military general and an athlete. But as the coronavirus pandemic swept over Russia, bankrupting businesses and families, Yekaterina Gorbunova, her husband, Alexander, and their four children lost nearly everything.

In her darkest moments, she wept. In moments of hope, she wrote to President Vladimir Putin and the office of Moscow's mayor asking for help getting an apartment. But no help came in time.

"We feel absolutely abandoned. It's as if you're in a boat and it's sinking and no one will come to rescue you," she said after her husband lost his job and the family was evicted from their apartment. "Nobody pays any attention to the people in need," she said. "Instead of doing good, no one cares."

These temporary accommodations for the homeless people in Moscow hostels are organized by Dom Druzei (House of Friends). MUST CREDIT: Photo for The Washington Post by Oksana Yushko

The pandemic has tanked economies as the world faces its worst collective downturn since the Great Depression. Russia has been particularly hard hit by the twin blows of the coronavirus and the collapse in oil prices. Russia relies on taxes from the oil and gas sector for 40% of its budget.

Lana Zhurkina, right, talks to a social worker while providing a medical help for a men living in one of the hostels organized by Dom Druzei (House of Friends) in Moscow on June 24, 2020. MUST CREDIT: Photo for The Washington Po

Since March, Russian charities and nonprofit organizations experienced a surge in the kind of clients they have not had before: families that had never been in financial crisis, but are now desperate. Some of them were unable to buy even food. Some were left homeless.

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According to Russian federal statistics agency Rosstat, an estimated 4.5 million people were out of work at the end of May. The nation's economy is predicted to shrink by 5.5% this year.

Thousands of small businesses have gone bankrupt in Russia's economic crisis caused by the pandemic and the collapse in oil prices. The government was slow to respond, and belated, patchy measures left millions of people adrift.

"You're on your own," said Ivan Molchanov, a welder who spent 20 nights on the streets after his employer suspended operations and stopped paying his 75,000-ruble monthly salary (about $1,070) and supporting his accommodation in a cheap workers' hostel.

"I slept in public toilets," he said. "I slept in building entrances. You follow people in who live there or you watch when they enter the code and memorize it."

Dom Druzei (House of Friends), an aid organization that normally offers medical assistance only to homeless people, set up six hostels in Moscow since April 22 and started general food-parcel distributions.

"The number of people asking for help doubled or tripled overnight," said Dmitry Aleshkovsky, founder of Nuzhna Pomosh, a foundation that raises money and supports charities and nongovernment organizations throughout Russia. "Millions, literally millions, of people lost their jobs in one second."

"I met a guy getting 200,000 rubles a month," he said, a sum equivalent to $2,857. "In one second, he fell to zero. He didn't have money to pay the rent, so he became homeless in one second."

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Lana Zhurkina, founder of Dom Druzei, was struck by the case of a young Moscow beautician who had an 18-month-old toddler and a salary that was "higher than average." She had a mortgage on an apartment, under renovation, and rent for a different apartment during the work. Then the pandemic temporarily closed the salon.

"She came to us and asked for help for food because the time came when she just had no food in the house," Zhurkina said. "We brought her food and she burst into tears because she could not understand how she could ever have found herself in this situation."

"There are many such stories," said Olga Lim, founder of the Chuzykh Detei Ne Byvayet (They Are Not Someone Else's Children) foundation for orphans and families in crisis in Khabarovsk in the far east, citing the story of a young chef with two young children whose cafe temporarily closed.

"There was a young mother with two little children. She was in a terrible situation when I arrived with food parcels. All she had was one packet of cereal, nothing else."

As Russia has eased its isolation period, some people have returned to work, including the beautician and the chef. But many small businesses have closed and many jobs have been lost.

Alexander Gorbunov, 42, husband of Yekaterina, also 42, with the four children ages 10 to 16, has worked for years as a client manager at a trucking company. It closed in March. Now he leases a car and drives for a ride-hail company, leaving early in the morning and returning about 2 a.m.

The family had been living in two small rooms of a communal apartment and had been on a waiting list for Moscow housing since 2011. They moved out last year and rented a larger space. In March, they barely cobbled together the rent.

"It was very tough. But we couldn't find the money for April and May," Gorbunova said. "We hoped the landlady would let us stay. She said, 'I don't care about your problems.' The landlady said, 'If you're incapable of paying, I don't want you.' "

She added, "We couldn't pay because we had no money. I was panicking. I was so confused and lost. When the crisis happened, the state didn't help us."

The couple had to borrow 300,000 rubles ($4,285) from two banks to cover their expenses. The Mercy Foundation of the Russian Orthodox Church paid the rent for April and May, enabling the children to finish the school year.

The couple's daughter, 16, is taking extra classes in medicine. Their 14-year-old son is taking extra classes in advanced mathematics. Their 12-year-old son's ambition is to become a military general, and their 10-year-old son is a good athlete. Now they are living temporarily at a Gorbunova's mother-in-law's summer cottage outside Moscow, with no idea where they will go when the school year starts in September.

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Putin has often promised to support families with many children, but many feel abandoned. During the crisis, families have received payments of 10,000 rubles ($142) per month for each child younger than 16, but Gorbunova said the payment doesn't cover a week's worth of expenses, even without rent.

"All families with many children feel that way," she said. "President Putin is a nice person. But as very often happens, a fortress is broken on the inside. There are worms burrowing inside the fortress."

The number of Russians filing for bankruptcy protection in the first quarter increased 68% over the same period last year, according to RBC news, with at least 1 million Russians predicted to declare bankruptcy in coming months. (In the United States, commercial Chapter 11 bankruptcies increased by 18% in March compared to March 2019, according to the American Bankruptcy Institute, but many more U.S. bankruptcies were filed in the months that followed.)

But even as many middle-class families and small businesses struggle, it is tougher for vulnerable families, homeless people and low-income people, many of whom do informal work in the "gray economy," a category excluded from government help.

Early in the mornings, homeless people sleeping on the benches in Moscow's gardens rouse themselves after the first dog walkers arrive. They know the network: the Burger King where they can rely on workers to hand out unused food, the church charities giving out food and clothing, the soup kitchens at hostels and railway stations.

"The situation got a lot worse," said Nikolai Rubanovskii of Nochlezhka, which hands out food to needy people and offers legal help to the homeless. "In our St. Petersburg project, we have a bus that distributes food. Before the pandemic, 60 to 80 people lined up. Now it's 140 standing in line."

In late April, police raided a soup kitchen in a park near Moscow's Kursky Railway Station. Police told the Tass news agency that the establishment violated rules against mass gatherings.

Earlier that month, other volunteers handing out food at the station were detained. Aleshkovsky thinks it is pointless to wait for the Russian state to rescue people in need. "It's a big wealthy country," he said, "and we don't understand why we are living so badly."



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