International Ice Hockey Federation (IIHF) has stripped Belarus of the right to hold the World Championship this year
Russian opposition activist Alexei Navalny arrested on arrival as he returns home
LONG READ: The oligarch problem
COVID-19 and Trump’s indifference helped human rights abusers in 2020
Russian opposition activist Navalny calls for supporters to take to the streets this weekend
One of Russia’s biggest wood product companies, Segezha could be Sistema’s next IPO
Oligarchs trying to derail Ukraine’s privatisation programme, warns the head of Ukraine’s State Property Fund
New Ukrainian VC firm QPDigital aims to invest up to $100 million in digital startups
OUTLOOK 2021 Lithuania
EBRD says loan to Estonia’s controversial Porto Franco project was never disbursed
Estonian premier quits after Tallinn development scandal
Czech Pirates and Mayors approve final coalition agreement for 2021 elections
OUTLOOK 2021 Czechia
BRICKS & MORTAR: Rosier future beckons for CEE retailers after year of change and disruption
OUTLOOK 2021 Hungary
Hungarian government remains silent after Capitol riots
World Bank expects modest recovery for Europe and Central Asia in 2021
OUTLOOK 2021 Slovakia
FDI inflows to CEE down 58% in 1H20 but rebound expected
Slovakia to invest €1.2bn in digitisation
Corona-induced slump in global clothing sector dragged down Albania’s 2020 exports
BALKAN BLOG: The controversial recipe for building up Albania
Heavy flooding causes chaos in parts of Southeast Europe
Vodafone Albania plans €100mn infrastructure investments after AbCom merger
Turnover rose on Bosnia's two stock exchanges in 2020 while prices fell
Storming parliaments: New Europe's greatest hits
Kyiv accuses Bosnian President Dodik of lying about icon gifted to Russian foreign minister
Bulgaria’s government considers gradual easing of COVID-related restrictions
Sofia-based LAUNCHub Ventures holds first close of new fund on €44mn
ING THINK: Growth in the Balkans: from zero to hero again?
Labour demand down 28% y/y in Croatia in 2020
Zagreb Stock Exchange's Crobex10 index at highest level since March 5
OUTLOOK 2021 Kosovo
Arrera Automobili aims to launch Albania’s first supercar
Transparency International warns of high corruption risk in CEE defence sectors
OUTLOOK 2021 Moldova
World Bank revises projection for Moldova’s 2020 GDP decline to 7.2%
Moldova’s PM resigns to prepare the ground for early elections
Montenegrins say state administration is most corrupt institution
75% of Montenegrins want EU membership
Montenegro’s new ruling coalition carves up top state jobs
OUTLOOK 2021 Montenegro
North Macedonia's manufacturing confidence indicator down by 8.5 pp y/y in December
OUTLOOK 2021 North Macedonia
OUTLOOK 2021 Romania
Romania’s central bank cuts monetary policy rate by 25bp to 1.25%
Romanian construction companies' activity slows in November after intense 2020
OUTLOOK 2021 Serbia
Serbia to launch talks with IMF on new reform programme
Slovenia’s opposition files no-confidence motion against Jansa cabinet
Slovenia’s government to release funds to news agency STA after EU pressure
UK Moneyhub picks Slovenia for post-Brexit European base
Slovenia’s dire COVID-19 situation in 4Q20 caused second economic dip
Turkcell denies any affiliation with $1.6bn loan in default extended by Ziraat Bank to Virgin Islands company
BEYOND THE BOSPORUS: Let’s tentatively pencil in a date for Turkey’s hot money outflow
Armenia ‘to extend life of its 1970s Metsamor nuclear power plant after 2026’
OUTLOOK 2021 Armenia
COMMENT: Record high debt levels will slow post-coronavirus recovery, threaten some countries' financial stability, says IIF
Armenia’s PM cautions conflict with Azerbaijan “still not settled” after trilateral meeting with Putin
OUTLOOK 2021 Georgia
Georgia’s political kingpin Bidzina Ivanishvili quits politics
Modern-day “Robin Hood” inspires Georgians drowning in debt
Durov rejects Western funds’ offer to buy 5%-10% of Telegram with $30bn valuation
Iran’s navy conducts missile drill while analyst argues Trump even capable of nuclear strike in final days
TEHRAN BLOG: Who’s more credible? Johnson backing Trump’s Nobel chances or Iran applauding arrest warrant for US president?
Central Asia vaccination plans underwhelm, but governments look unruffled
Sole lowcost Kazakh airline FlyArystan makes 2020 gains
Fears of authoritarianism as Kyrgyz populist wins landslide and backing for ‘Khanstitution’
OUTLOOK 2021 Kyrgyzstan
Mongolia's winter dzud set to be one of most extreme on record says Red Cross
Mongolian coal exports to China paralysed as Beijing demands virus testing of truck drivers
Mongolia fears economic damage as country faces up to its first local transmissions of coronavirus
Mongolia in lockdown after suffering first local coronavirus transmissions
OUTLOOK 2021 Tajikistan
China business briefing: Not happy with Kyrgyzstan
OUTLOOK 2021 Turkmenistan
Turkmenistan: How the Grinch stole New Year
Turkmenistan: The dammed united
COMMENT: Uzbekistan is being transformed, but where are the democratic reforms?
OUTLOOK 2021 Uzbekistan
Download the pdf version
The coronavirus (COVID-19) story in most of Russia’s regions is bleak. At the start of November, the regions saw a 40% increase in cases and are all experiencing a shortage of doctors, according to the Kremlin.
Kaliningrad’s number of infections is now higher than it was in spring. Many hospitals in Novosibirsk are refusing to admit patients with other illnesses or perform non-urgent medical procedures. St Petersburg has around 600 hospital admissions per day, and one town in the Arkhangelsk region has patients staying on benches. A healthcare worker in Kemerovskaya Oblast died of COVID-19 after being vaccinated, and at least three more medics in Siberia have contracted the virus since receiving the vaccination as well.
Russia’s regions are coming under increasing pressure that is made being worse as they are also running out of money. Most regions were already running fiscal deficits and now face a debt increase of 125%. Khakassia and Mordovia have already been taken under the Financial Ministry’s manual control, while Ingushetia in the south-east is already on the verge of bankruptcy.
Russia’s regions cannot afford another lockdown, yet neither can most of their people. Reporting from that small town in the Arkhangelsk Region, the BBC found that its ambulance drivers take home just $400 a month: barely enough to make ends meet, and savings were already badly eaten into during the last lockdown.
Romir estimates just under half of Russians now spend most of their income on food (up from 30% in 2016). The average salary earned in August 2020 was RUB47,648 ($623). The average salary in the Golden Ring city of Vladimir is even less than that, yet food prices there are comparable to those in Moscow.
For millions across Russia, particularly the young, moving to cities with no, or poorly paid, work and unaffordable accommodation is still more attractive than staying put. According to Rosstat, 4mn Russians moved to bigger cities in 2016 (a trend that has largely continued).
A VTsIOM survey from last year showed around one quarter of the population wanted to relocate, with 61% of that figure preferring the bigger cities. The two most important factors noted were unemployment, or a higher standard of living in another settlement. Another poll by Gallup showed 44% of young people want to emigrate: most were urban based, had some transnational experience and indicated unfulfilled economic expectations.
The fact is, Russians have become increasingly worried about basic quality of life issues in the last ten years. Last year, the talk of the towns was cuts to healthcare spending – a topic that has aged well. The young now view social mobility as beyond their reach, unless their families have appropriate political or business connections, so they are opting for physical mobility instead.
But the nation’s capital cannot continue to expand at its current rate to accommodate millions more pouring in from the regions in search of work that, frankly speaking, is not there. Russia’s unemployment level has doubled and affected urban centres far greater. Rural unemployment actually decreased in September.
City-based jobs are slowly being wiped out and many larger companies started encouraging their employees to work from home last month. Even the Moscow city government is holding off on additional spending without a return to a full lockdown, setting aside RUB700bn of borrowed money to be spent over a period of three years.
The long-term polarisation and regional disparities in Russia are unsustainable going forward.
Historically, and particularly following the USSR’s collapse, the focus has been on those resource-rich peripheries or heavily populated regions. That story is well documented: post 2014, Russia did not wean itself off its heavy reliance on commodities. As statistics from the World Bank show, reliance increased. As oil prices climbed in the mid-2000s, so too did the demand for better accommodation, consumption of new products and entertainment. These demands remain in Russia’s regions, but the economy’s and currency’s position does not.
The result has been uneven development and underperforming, expensive public services. Most regions now face an employment misbalance, lack of resources and institutional capacity to govern. Movement and migration to the cities is adding to the existing development pressures at all levels of government. And this was before the pandemic struck.
Towns with populations less than half a million have been the biggest losers. Russia’s urban population has risen steadily since 2007, but it is more concentrated in the larger cities than ever before. And part of the government’s answer was encouraging people to have more children.
Some attempt was made by Dmitry Medvedev in 2010-11 to develop the regional economy by encouraging innovation in sixteen cities with smaller urban settlements, but these were largely unsuccessful. And to be fair, there were many reasons for this; some were culturally and regionally specific; federal budgetary constraints had an important impact; in some cases, a system of mutual trust between municipal and regional governments, necessary to enact the reforms, never emerged.
Redevelopment funds (around $1.5bn annually) were also helping forty smaller Russian cities with a combined population of 23mn, stretching from Europe to the Far East, including historic towns in Russia’s west. Rail, streets and squares were all being transformed in an effort to boost domestic tourism and increase local living standards. Billions more had been promised but may be put on hold.
Russia’s strongly centralised political system means the national government must fully support an economic rescue package for it to be successful. In the past, it has been rather lukewarm (the two notable exceptions being Sochi for the 2014 Winter Olympics, and the 2018 Football World Cup cities).
Properly addressing this structural imbalance of Russia’s regions is well overdue, but little in the way of solutions or policy is coming out of the Kremlin on this issue. There is still RUB100bn to be transferred to the regions by the end of the year, but it likely is not enough.
The default option, at least for now, seems to be austerity. To put it bluntly, that is the last thing Russia’s regional residents need.
here to continue reading this article
and 5 more for free or purchase
12 months full website access including
the bne Magazine for just $250/year.
Register to read the bne monthly magazine for
Password could contain only
and have 8-20 symbols length.
Please complete your registration by confirming your
A confirmation email has been sent to the email
address you provided.
can't be empty.
No user with
this email address.
Access recovery request has expired, or you are using
the wrong recovery token. Please, try again.
Access recover request has expired.
Please, try again.
To continue viewing our content you need to complete
the registration process.
Please look for an email that was sent to
with the subject line
"Confirmation bne IntelliNews access". This email will have
instructions on how to complete registration
process. Please check in your "Junk" folder in
case this communication was misdirected in your
If you have any questions please contact us at firstname.lastname@example.org
Sorry, but you have used all your free articles fro
this month for bne IntelliNews. Subscribe
to continue reading for only $119 per year.
Your subscription includes:
For the meantime we are also offering a free
digital weekly newspaper to subscribers to
the online package.
Click here for more subscription options,
including to the print version of our
flagship monthly magazine:
Take a trial to our premium daily news
service aimed at professional investors that
covers the 30 countries of emerging
For any other enquiries about our
products or corporate discounts please
contact us at
If you no longer wish to receive
Magazine annual print
Website & Archive
Combined package: web
access & magazine print
Take a trial to our premium daily news service
aimed at professional investors that
covers the 30 countries of emerging Europe: