The government’s slow and uncoordinated response to Covid-19 has prompted municipal and regional administrations to take the lead in tackling the outbreak. While the central government now appears to be taking a more proactive approach, President Vladimir Putin is still playing a limited role in crisis management.
On 31 March, parliament passed a package of bills aimed at curtailing the spread of the disease and mitigating the likely economic fallout. The adopted legislation allows the government to introduce a special emergency regime to assume additional powers to tackle the disease. Parliament has also approved substantial administrative and criminal penalties for non-compliance, which include up to five years in prison for disinformation and up to seven-year sentences for breaking the quarantine. In terms of economic support, sick-leave allowances for families with children were increased, and a special tax regime for the self-employed was introduced. Moreover, regional administrations will be exempted from the repayment of loans to the federal budget until the end of 2020.
To counter mounting fiscal pressures from the low oil prices and Covid-19, parliament has eased the federal budget rules, thereby facilitating the tapping of the USD 157bn National Wealth Fund, which was recently boosted by the transfer of oil revenues from 2019. To further shore up public finances, a new 13% income tax on interest proceeds from bank deposits greater than RUB 1mn (around USD 12,900) was also adopted. The move has stirred concerns over a potential bank run as the new tax may apply to more than 50% of all deposits in the country. While the initial fears have been alleviated by the enactment date having been set for 2021 (with payments due in 2022), the new tax may still face economic and political challenges in the near future.
The raft of measures adopted during the past few days suggest that the central government is taking a more proactive approach to crisis management. Until now, the government’s response to Covid-19 appeared to be largely uncoordinated, leaving municipal and regional authorities in charge. Moscow mayor Sergey Sobyanin (United Russia) has taken the lead in enacting strict measures to mitigate the spread of the disease, which were promptly mirrored in other cities across the country. If Moscow manages to successfully handle the crisis, Sobyanin’s leadership will inevitably bear political dividends and could even prompt talks of him as a potential successor to Putin. In case of failure, however, Sobyanin could be used as a scapegoat to hold off public discontent.
Meanwhile, the central government’s early decision to close the border with China back in late January was followed by weeks of inaction, showing that the Russian authorities misjudged the seriousness of the crisis. The government’s failure to prevent the spread of Covid-19 at the early stages could lower public trust in Putin, whose surprisingly limited role in the management of the situation contrasts with his rhetoric of stability and leadership. Faced with serious economic and social challenges that are likely to ensue, Putin may find it increasingly difficult to garner public support for the constitutional amendments paving the way for him to remain as president till 2036.
