Business rallies to help in fight against coronavirus across Eastern Europe and Central Asia

Business rallies to help in fight against coronavirus across Eastern Europe and Central Asia
Business leaders across the Former Soviet Union have used some of the wealth they have made in the last three decades to help in the fight against the coronavirus pandemic.
By Ben Aris in Berlin May 20, 2020

The outbreak of the coronavirus in Eastern Europe and Central Europe has not been as severe as in the rest of the Continent, but that is starting to change as curves flatten in western Europe and governments there start to wind back their lockdown restrictions.

Russia is now in the frontline after the number of reported infections skyrocketed to over 10,000 new cases a day. In the last week the rate of growth of the infection has slowed but by 17 May the country had the second most infections in the world after the USA.

Many of the countries have reacted fast and imposed strict lockdowns as they are less prepared than their western counterparts to deal with an epidemic. Burdened with fragile institutions, very weak public finances and underfunded public health institutions they are poorly equipped to deal with a large-scale public health emergency.

Russia had more than 290,000 cases of coronavirus as of May 18 and 2,722 deaths from the disease. Moscow is the epicentre of the outbreak, where more than half of Russia’s infections have been reported. However, the authorities were slow to acknowledge the global nature of a pandemic and slow to impose social distancing restrictions.

The coronavirus is a global problem. It is not a Chinese virus or a European virus, and no one is immune from it. The Russian authorities have now accepted this and are adopting many measures taken in other countries. There has been some controversy over the accuracy of the infection and mortality rates, as the numbers of infected are high, whereas the number of deaths per 100,000 are low, but the authorities claim that is a function of the extensive testing it has been conducting. The actual success or failure of the government’s response will eventually become clear, but it remains to be seen how Russia’s governance system and hospitals will cope with the crisis.

Russia

The business community across the Former Soviet Union (FSU) has rallied to the aid of countrymen and has been amongst the most generous donors in the fight against the coronavirus. And its help is doubly effective as they operate in countries where the public health system is underfunded so their aid can be put directly to work where the government is struggling to help and where it is most needed.

Metals tycoon Vladimir Potanin has pledged the most money in Russia at just under $150mn. Potanin owns just over a third of nickel and palladium producer Norilsk Nickel in Russia’s far north and has focused on aiding the remote cities which provide the labour force for his companies. The funds will be used to purchase medical equipment, medicine, and PPE for healthcare institutions, and for Norilsk Nickel’s employees and businesses. According to a ranking publsihed by Barron’s on May 13, the size of the donation pledged by Potanin’s charity foundation makes it the world's second largest after that of Jack Dorsey.

The Russian people have also put their hands in their pocket to help the disadvantaged. Kommersant reports that non-profit organizations recorded a notable increase in donations during quarantine. In March, the number of online transfers to non-profit organizations grew by 37% compared to February, according to online money services Yandex.Money and QIWI. In April, the number increased by an extra 38%, meaning that there were 89% more donations in April than February. Contributions rose not only by quantity, but size. According to the data, in April, the average transfer increased by 7% to RUB1021 ($14.11), the highest for a year and a half.

Ukraine

Ukraine is in an even tighter spot as two decades of ineffectual reforms have left it one of the poorest countries on the continent. Happily as the virus was relatively late to arrive in Ukraine and the authorities reacted quickly, the number of those infected has been contained. There were officially more than 18,600 coronavirus cases in Ukraine as of May 18 – most of them in Kyiv, but with a hot spot in the western border region of Chernivtsi as well – which is an order of magnitude less than that of Russia.

Despite the change of government in March, the Ukrainian authorities’ response has been swift and robust. On March 12-13, they closed most borders. The authorities also shut schools and prohibited large gatherings, albeit only for three weeks. And they imposed draconian transport restrictions, including the closure of the Kyiv metro. On March 25, the authorities converted restrictions in the regions into a national state of emergency, due to last for a month.

The epidemic in Ukraine has been taken in hand, but the country will still face some major challenges. Millions of Ukrainians work abroad, and have been among the first to be laid off; returning migrant workers brought the coronavirus with them. And the economy will take a big hit from a reduction in remittances, which before the crisis were worth $1bn per month, but could more than halve now.

As in Russia, Ukraine’s top businessmen have been quick to act. The Rinat Akhmetov Foundation, the charity arm of Ukraine’s richest oligarch, has made the largest donation so far, at over $11mn. Another influential Ukrainian businessman, Alexander Yaroslavsky, convinced his friend, Chinese internet entrepreneur Jack Ma, who owns Alibaba, to help. Ma sent Ukraine a million new coronavirus tests worth $80mn.

Belarus

Belarus had reported 29,650 confirmed cases as of May 18, and 165 deaths from the disease. Belarus' President Alexander Lukashenko has largely ignored the epidemic and went as far as to hold a full May Day military parade on May 9 with thousands in attendance – the only such parade to have taken place this spring in Europe. As of now, there have been no large-scale quarantine measures, internal restrictions on freedom of movement, or school closures. And Belarus is the only country in Europe with a football league that has remained active; the new season started on March 14.

As Lukashenko has not declared a state of emergency nor taken any significant action, Belarus’ business community has not gotten involved, although the country can boast several multi-millionaires, mostly from the IT sector.

Moldova

The Moldovan authorities identified the country’s COVID-19 “patient zero” who fell sick on March 7. By May 18 another 6,060 citizens had been officially confirmed infected, and 211 died.

Like with most of the poor small countries the officially reported numbers are questionable as the government’s incentive is to roll out a large PR effort as a medical response.

But the authorities seem to understand the severity of the situation. The government asked parliament to declare a state of emergency on March 16, when the country officially only had 29 infected cases. And even before the emergency was declared the authorities had already closed markets, restaurants, and other public places, sparing only grocery stores, pharmacies, and petrol stations. They also restricted air and rail travel. The efficacy of these early prophylactic measures was diminished by the fact that a large part of the population did not taken the pandemic seriously, resulting in multiple reported violations of public gathering restrictions across the country. The state of emergency has not led to a total lockdown, but it has hurt economic activity across the country.

The Ministry of Finance of Moldova has opened a bank account for donations intended to combat COVID-19. Despite the country’s low income level and the economic downturn, citizens have already contributed a remarkable $1.5mn.

Kazakhstan

Even though the first officially registered case of a coronavirus infection was recorded as late as on March 13, Kazakhstan has been taking counter-virus measures since the end of January, when visa-free tourism for Chinese visitors was cancelled and sanitary and epidemiological controls were introduced at the borders.

It took the country just two days to announce a state of emergency. Furthermore, the authorities left the borders open just for one day to allow everyone to leave or enter the country before the borders were sealed completely at 7am on March 16.

Three days later Kazakhstan’s twin capitals, Nur-Sultan and Almaty, were put on full quarantine lockdown. They remain home to all the officially recorded cases in the country: 6,440 have been infected and 34 have died.

Within the first week of the crisis, former president Nursultan Nazarbayev invited businessmen and citizens to form a national fund to fight coronavirus and a whopping $41mn was raised within just a few days. The largest contribution of $10mn came from Kazakhstan’s top oligarch and the former president’s son in law, businessman Timur Kulibayev.

Uzbekistan

Uzbekistan watched the development of the crisis carefully and was another country to react decisively when it became clear things would only get worse. According to the official data, 2,746 citizens are infected with COVID-19 as of May 18.

The new reformist government of Uzbek president Shavkat Mirziyoyev has thrown itself into a campaign to fight the virus: 43 medical centres were established in different regions of the country and it’s 11 medical institutions, 97 health resorts, camps and dormitories are converted to treat those put into quarantine.

The government has set up the Charity and Health Foundation to combat coronavirus, which is under the control of the Ministry of Health of Uzbekistan.

Uzbekistan has few oligarchs of its own, but it has many Uzbeks that made their fourtunes outside of the country. The largest donation made to the Charity and Health Foundation so far was from one of the UK's richest tax residents, according to the recent Sunday Times Giving list, Uzbek-born billionaire Alisher Usmanov, who transferred $20mn to fight the virus and is currently hold up in Tashkent in self-isolation during the COVID-19 lockdown. Usmanov has major business assets in Russia, where he has also made major donations to fight the virus in Russia in partnership with USM holding’s partners.

Georgia

The tiny Caucasus republic of Georgia has coped with the outbreak of the epidemic extraordinarily well and managed to bring it under control quickly while keeping the number of fatalities down. By May 18, only 701 people in Georgia were infected with COVID-19 and the number of deaths was in low double digits.

The stringent response by the government was a result of the grim realisation that the country is ill equipped to fight the virus and would have been quickly overwhelmed. The strategy has been to avoid the spread of the virus in the country at any cost. The government implemented its first measures in mid-February, stopping flights from China and Iran, but not those from Italy and Western Europe. This explains why the majority of infected people entered Georgia from Italy. Georgia has also imported cases from Spain, France, the Czech Republic, the United States, Russia, and Azerbaijan.

Georgia suspended flights with Western Europe on March 10, and shut its land borders with Armenia, Azerbaijan, and Turkey a few days later. Nurseries, schools, and universities were all closed two days later just before the government declared a one month state of emergency, shutting down all “non-essential” commerce and banning public gatherings of more than nine people.

But, despite the successes, the COVID-19 crisis has already had a dire impact on Georgia’s economy. Tourism and related businesses comprise a huge part of the economy and were brought to a standstill literally overnight. The country’s currency, the lari, has lost almost 20% of its value relative to the US dollar since the crisis began and economic growth has comes to a standstill.

Following the example of neighbours, Georgia also set up a charitable trust to collect donations to counter the virus. As of today, a total of $40mn has been collected of which $31mn was contributed by a philanthropist who wished to remain anonymous. According to some reports, the mysterious philanthropist is Bidzina Ivanishvili, a billionaire and the ex-prime minister of Georgia who heads the ruling Georgia Dream party.

 
 
 
 
 
 
 

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