Putin’s Policy on Coronavirus

Eric Zuesse

Until now, I had respected the independent IntelliNews site, and also RT, for their reporting on important geostrategic issues, but their reporting on May 12th regarding Russian leader Vladimir Putin’s coronavirus-19 policies made some allegations which falsely suggest a similarity between his policies and the American President’s policies on coronavrus-19.

The key document is dated May 11th and is titled “Meeting on sanitary and epidemiological situation”. Unfortunately, it was not linked to either in the RT report or in the IntelliNews report.

On May 11th, RT headlined “Paid holidays end May 12, Russia to start gradually easing coronavirus quarantine measures – Putin” and reported that, “‘Starting from tomorrow, May 12, the joint non-working period for the whole country and for all the sectors of its economy ends,’ Putin said during a televised speech on Monday. … The conclusion of the ‘holiday’ period allows Russia’s regional authorities to begin lifting Covid-related restrictions. This process will not be fast, Putin said, and all anti-coronavirus precautionary measures will remain in place. Any mass gatherings will remain banned across the country as well.” Nothing was said in that report regarding whether Putin prioritizes the public’s health or instead the nation’s economy. The general impression was that he is more concerned about protecting the economy.

On May 11th, the IntelliNews site bannered “Putin eases Russia’s coronavirus lockdown restrictions”, and sub-headed “Putin has eased the lockdown restrictions a little, but the change has more to do with restarting Russia’s stalled economy than with the population’s frustration at being kept indoors.” This report noted that “Companies will increasingly have to choose between sacking workers or going bust. The big employers have been the focus of the Kremlin’s economic aid programmes, but the SMEs [Small and Medium-sized Enterprises] have largely fallen through the cracks.” Nothing was cited there to back up that assertion regarding his being more concerned to protect large than small firms.

Here are some highlights of the actual document, starting with its opening:

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en.kremlin.ru/events/president/news/63340

Vladimir Putin held a meeting, via videoconference, on the sanitary and epidemiological situation and new measures to support the country’s population and the national economy.

May 11, 2020

You are aware of my position, it hasn’t changed. The key priority for us is people’s lives, health and safety.

The period of non-working days announced earlier expires today, May 11. Overall, it lasted for more than six weeks, beginning March 30.

This extraordinary measure enabled us to slow the epidemic, giving us the time we needed to substantially improve readiness of the entire healthcare system in case the epidemiological situation took a turn for the worse.

The number of specialised hospital beds equipped for treating severe cases was increased from 29,000 to 130,000, and we have built up equipment and supplies reserves, including a reserve capacity of ventilators, which has critical importance for us. Thank God, of course, that so far we have had to use only a small fraction of this stand-by capacity.

What matters the most is that every region is ready and has everything it needs to help people that might suffer from severe complications, and offer them specialised medical services, including intensive care. Let me emphasise that almost everyone who needs this care is receiving it.

Another very important thing is that the doctors now know much more about this disease than at the outset of the epidemic. They have gained first-hand experience as well as learned best practices from their foreign colleagues. Newly developed treatment methods rely on effective medicines, and we have been expanding their production.

Foreign experience showed that it was the failure to make the necessary preparations as well as an overwhelmed healthcare system that were the main causes of a high mortality rate, making it impossible to save those who could be saved. Let me reiterate that we are now able to provide this kind of assistance. It would not be an exaggeration to say that measures taken in advance helped us save many thousands of lives. …

Social workers are now carrying an extra workload and higher risks. Therefore, I think we need to introduce extra pay on a national level for the three months between April 15 and July 15. I would like to make it clear that the pay that was already allocated for April will reach people regardless.

Doctors at social institutions will receive an extra 40,000 rubles for a two-week shift. Those who are working directly with coronavirus patients will receive 60,000 rubles.

Social workers, teachers, mid-level medical and administrative staff will receive 25,000 rubles and if they are dealing with infected patients – 35,000 rubles. Junior medical staff will receive 15,000 and 20,000 rubles, respectively. Maintenance staff will receive 10,000 and 15,000 rubles, respectively. …

Of course, like before, all government bodies and municipal authorities will continue working, as well as facilities with a continuous production cycle, medical institutions, pharmacies, financial bodies, grocery stores and stores selling essential products.

Additionally, starting May 12, wherever possible, it is necessary to create conditions for resuming the operations of backbone industries, which include construction, industrial production, agriculture, communications, energy production and extraction of mineral resources.

These industries involve a significant number of workers and working there means the income and wellbeing of their families. It is also important that these operations do not involve direct contact with consumers – so it is possible to resume operation with low risk. Naturally, all sanitary regulations must be complied with. …

First of all, families with children. They always have a lot of things to take care of, but now if a family loses its income it is very difficult. All the more so if one of the parents, or worse, both of them, have lost their jobs. Unfortunately, this is happening in some cases.

As you know additional benefits are being specified for families entitled to maternity capital in the amount of 5,000 rubles a month per child under 3. The family will be getting this monthly amount for three months from April through June.

In addition, families with parents who lost their jobs are entitled to 3,000 rubles a month for each underage child. These benefits will also be paid for three months.

Next. We have made a decision that families with an income per person below the subsistence minimum can apply for benefits for children aged 3 to 7, inclusive, starting June 1 rather than July 1 as originally specified.

I draw you attention to the fact that these benefits are calculated, as I said in the Address, from the beginning of the year. Thus, a family who applies in June will get all the benefit it is entitled to in the first half of the year. On average (let me stress – on average) this can add up to 33,000 rubles per child, and a family like this will be getting regular benefit payments every month. The national average is 5,500 rubles per child per month.

However, I believe that this not really enough these days. Many more families with children need direct support from the state. The favourable macroeconomic conditions we have created in recent years for the progress of the economy, the rehabilitation of the banking and financial system in the country and the reserves we have accumulated allow us to take more decisions on supporting people.

In this connection I suggest, first of all, that the minimum child allowance be increased from 3,375 rubles to 6,751 rubles [per month]. This benefit is to be paid to non-working citizens, including students. As a rule, these are young parents and young mothers. It is important that we support them.

Second, I mentioned additional payments for children under 3 years old in the families that are eligible for maternity capital. But many families are not eligible because their children were born before January 1, 2020 when the new parameters for receiving maternity capital, including for the first child, were approved.

In light of this, I suggest that 5,000-ruble monthly payments be approved for such families. Moreover, they should receive this amount not only in May and June, but also for April, that is, retroactively. In this way, all families in Russia with children under 3 years old will receive 5,000 rubles a month.

And last, one more child support measure: from June 1, families will receive a one-off payment of 10,000 rubles per child aged between 3 and 16 years.

I would like to point out that this is not the time for people to waste a lot of personal time collecting all kinds of certificates and statements. Therefore, we have taken the only fair decision, as I see it, that no formal criteria are adopted for this one-off payment. The only condition is that assistance must be provided to everyone who needs it.

As I said, every family in Russia with children between 3 and 15 years inclusively will be able to submit a request for this one-off assistance starting tomorrow, online via the Gosuslgi [Public Services] Portal or through the Pension Fund, and receive 10,000 rubles per child starting June 1.

Overall, in accordance with the decisions we took today and our previous decisions, assistance will be provided to 27 million Russian children, from babies to schoolchildren. I believe that this is what state priorities should be like, especially now that we must above all take care of our elderly people and support families with children.

Colleagues,

As you know, we hold meetings with the participation of the business community on supporting and developing key economic sectors almost every week. Moving forward, we will definitely keep this process in place for devising targeted solutions and fine-tuning earlier decisions. We will discuss developments in agriculture, textiles, communications and the IT sector.

However today I wanted to draw your attention to one urgent and system-wide problem. According to the latest official figures, the number of unemployed people in Russia has reached 1.4 million, having doubled compared to early April.

This is quite a challenging situation that requires comprehensive efforts to stabilise employment and support those who have lost their jobs. I ask the Government to draft resolutions to this effect. We will discuss them at a separate meeting that will take place before the end of May. …

Consequently, there is no question that measures to support the economy, and primarily those designed to keep companies on a sustainable footing, will have to be carried out. We need to maintain jobs, professional teams, business infrastructure and capacities so as to avoid any further sharp fall in employment, while enabling business owners to restore their teams, expand operations and get the economy back on track.

Let me remind you that we have offered direct government subsidies to small and medium-sized businesses, as well as socially-oriented NGOs in the affected sectors, so that they can pay their employees salaries for April and May. The key requirement for receiving this support is to keep at least 90 percent of their employees on the payroll compared to April 1. This measure could potentially cover 4 million workers.

At the same time businesses need to understand their prospects; they need to see the horizon of the unfolding situation so they can make decisions, as I said, with a planning horizon rather than just for the next month or two.

So, we have a number of other measures.

First. I suggest that a special employment support loan programme be launched effective June 1. All businesses in the affected industries as well as socially-oriented NGOs should be eligible for it. This measure could potentially sustain 7 million jobs.

Loan volumes will be calculated based on a formula of one minimum wage per employee per month for a period of six months. The loan maturity date will be April 1, 2021.

It is crucial that these loans are accessible to businesses while banks should be interested in working with this programme. The final interest rate for the borrower will be a preferential 2 percent rate. Everything above this will be subsidised by the state. The interest will not need to be paid monthly, it will be compounded. In addition, 85 percent of the loan will be guaranteed by the state.

And the key is that if the company keeps 90 or more percent of its current jobs, after the loan matures, it will be completely written off as will the interest on it. These costs will be covered by the state.

If the number of jobs is kept to least at 80 percent, half of the loan and compounded interest will be written off.

Such loan could be used with some flexibly for paying wages and, for example, to refinance earlier no-interest, so-called “wage loan.” As you know, we are already using this employment support tool.

However, even with all the freedom to manoeuvre for businesses and other organisations, I must instruct the Government to ensure control over the basic premise: businesses must spend the funds primarily to pay wages. Any schemes like “paper jobs” or jobs with wages below minimum wage are to be excluded, totally excluded. I ask you to strictly monitor this.

And of course, along with the loan, businesses will have to co-finance wages with their own funds.

What I want to stress here is that we have supported and will continue to support businesses, but those who care about their employees are the priority. Once again, the point of providing government support is to motivate businesses to retain jobs and maintain wages.

Second, affected industries have already been granted tax and social insurance contribution deferrals for six months and will be able to pay it back in instalments over the course of a year – as business representatives asked me to do at one of the meetings. However, to simply postpone tax payments is apparently not enough right now.

Therefore, I propose cancelling these payments for the second quarter of this year, except for VAT. This measure will apply to private entrepreneurs, small and medium-sized businesses in the listed industries and socially-oriented NGOs.

Once again, to be clear, in this case, taxes and social contributions for the second quarter will not just be deferred, they will be cancelled – for April, May and June, the months that businesses find themselves in a difficult situation and are still experiencing hardships. More than 1.5 million companies will be able to benefit from this measure.

Third, last year, in four regions – Moscow, Tatarstan, the Moscow Region and the Kaluga Region – self-employed citizens, including those providing transport services, rental property owners, tutors, babysitters, etc., got an opportunity to do their businesses officially, rather than in a so-called grey area and pay income tax at a reduced rate of 4 or 6 percent. Some 340,000 people used this opportunity last year.

These people trusted the government and believed the guarantees for secure and civilised work. So, I think this aspiration should be supported and even encouraged. I propose tax rebates for taxes paid by the self-employed for the 2019 fiscal year in full.

The fourth proposal is related. Currently, people can register as self-employed in 23 regions. The number of officially registered self-employed workers is now over 650,000. I propose providing all self-employed citizens with a tax credit in the amount of one minimum wage they could use to pay taxes this year, thus retaining their own income.

Fifth, we also need to lower the fiscal burden on the self-employed in the most heavily affected sectors. I suggest that this year they be given a tax deduction in the amount of one minimum wage from their insurance payments, which will come as additional support to them at this difficult time.

And finally, the sixth measure. Government agencies providing microfinancing support for the self-employed, family enterprises and small businesses have been established and are working efficiently in all Russian regions.

I suggest that additional capitalisation be provided to small but efficient regional development institutions without delay and that 12 billion rubles be allocated for this purpose. These funds have been earmarked for the national project on small and medium-sized businesses for the next few years. I believe that this financial resource must be used now, in 2020. …

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Clearly, Putin’s approach is socialistic, not at all capitalistic, as Trump’s is in America.

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Investigative historian Eric Zuesse is the author, most recently, of  They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of  CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.