Kaliningrad residents start to believe their fridges, rather than the TV

Kaliningrad residents start to believe their fridges, rather than the TV
Kaliningrad’s stability could be threatened by Moscow’s decision to strip the region of its special economic zone status.
By Linas Jegelevicius in Kaliningrad March 7, 2016

Back in 2010, Kaliningrad, the Russian territory sandwiched between Poland and Lithuania, was rocked by protests that forced out the regional governor. But today, the protests in the territory have moved from the streets into kitchens and living rooms.

“We call them ‘tussles’ between TV sets and fridges,” says Igorj Rudnikov, an independent member of Kaliningrad Oblast Duma, the region’s parliament, and editor-in-chief of Novyje Kolosia magazine.

He says that despite massive layoffs and pay cuts, a lot of residents still chew on the “fodder” from their TV sets  (“Not very nutritional but still patriotism-inducing,” jokes Rudnikov), but, with their empty bellies rumbling, even Russian patriots are starting to believe what their fridges are telling them.

The unemployment rate last year surged by a quarter to 4%, but the number massively under-reports the true situation, experts say.

“So far, unemployment is of a latent character as many workers are being forced to take a lengthy vacation time. With the economic situation worsening, the employers will, sooner or later, make decisions that are not in their employees’ favor,” says Vladimir Kuzin, a scholar of Kaliningrad State Technical University.

Тhe rate of joblessness is set to go up because of the plight of the region’s main industrial pillars: meat and fish canned food producers and electronic appliance manufacturers.

These companies are winning far fewer orders from domestic and foreign markets. Domestic sales have been hit by the Russian downturn, while for appliance makers, the fall in exports is a result of the depreciation of the ruble against the dollar, which has hiked the cost of imported inputs. This has effectively crippling Bautek, the local producer of TV sets and vacuum cleaners, where production volume is reportedly one sixth of what it used to be in 2014.

Today an unusual calm lingers not only in Victory square, formerly Ploshchad Lenina (Lenin square), once a popular hangout spot, but also on all the streets dotted with Russian and foreign brand shops, which are eerily empty.

“The city is quiet as many people now stay at home. Many people have lost their jobs, the ruble is worthless and many live from hand to mouth now,” says Rudnikov.

Before, many Kaliningradians would embark on cross-border trips to neighbouring EU member states Poland and Lithuania. Not now.

“The trips have become too expensive now because of the weak ruble. We miss the Lithuanian traditional food and the Western atmosphere,” says Sergeij Kovaliov, a senior manager at a communications company in Kaliningrad. Because of his company’s revamp, his monthly salary has halved.

Patriotic apathy

However, Oleg Carkov, a councillor representing United Russia in Baltijsk, a town near the Lithuanian border, says the “dissatisfaction” that there was back in 2010 is gone now.

“The central government has addressed Kaliningrad’s needs, channeling many resources into it. If there is any dissatisfaction now here, it is related to the work of local utilities, not the politics. People know well the source of the economic hardships,” he told bne IntelliNews.

Although the situation is becoming more and more difficult, a return of the 2010 street protests is unlikely, according to Rudnikov, because of  apathy – “Local opposition, like that in Moscow, is very weak,” he says – and patriotism.

The Russian government is counting on both to keep Kaliningrad calm, and the strategy seems to be working, even with those who were against the Kremlin and Putin in 2010.

Kovaliov, the communications manager, told bneIntelliNews that he had been “an avid supporter” of the ousting of former Kaliningrad oblast governor, Georgy Boos – who was forced to step down after putting hefty taxes on car, motorcycle and boat owners – but now he is ready to make sacrifices in his standard of living for the sake of Russia.

“People understand that Russia is under attack now by the United States and the European Union. We have to stand firm. If they succeeded in their ultimate goal – the removal of Putin  – the country will inevitably sink into chaos. Even those who were against Putin in 2010 now support him.  Russia does not have another leader like him and only he can take Russia through the economic tumult,” Kovaliov says. “Things will get better soon. Others cannot mess up with Russia. I fully support Putin.”

The Kremlin has reinforced this message by beating the drum to emphasise Kaliningrad’s strategic importance. Moscow has significantly ramped up the military presence in the exclave over the last couple of years and military exercises near the border with Lithuania and Poland have become more frequent.

But despite apathy and patriotism, Kaliningrad’s stability could be threatened by Moscow’s decision to strip the region of its special economic zone status, which gave it lower business taxes.  

“Things are complicated all over Russia, but Kaliningrad will soon find itself in an especially difficult plight,” says Rudnikov. “With the law on the Yantar Special Economic Zone expiring on April 1 and the Russian parliament unwilling to extend it, hundreds and thousands of local companies will see their tax benefits slashed. The businesses are already shutting down and layoffs are widespread.”

Because of the region’s economic deterioration, the Kremlin will put off elections to local parliaments later this year, he says. “Putin’s United Russia party has found itself in a very difficult situation because of the economic crisis,” Rudnikov said. “If Putin goes for the election, he might lose it.”

In the local Duma election in 2011, Rudnikov won a landslide victory against a Putin party member and a candidate of the Communist Party, but after Russia amended the election law last year, barring independent candidates from any political race, he does not know if he will be allowed to run.

Powder keg

Regional analysts argue that though Kaliningrad is calm at the moment, it could pose problems in the future for the Kremlin.

“Although I do not believe in the revolutionary potential of the Russian society, in terms of identity, Kaliningrad is very different from mainland Russia, especially its young generation,” says Laurynas Kasciunas, head of Political Analysis and Research Division at the Eastern Europe Studies Centre in Vilnius, Lithuania.

“If ever Russia’s ruling elite breaks down from the inside, which I see as the only way for a shake-up in the Kremlin, Kaliningrad will likely become a hotspot in the country. But Putin certainly remembers the 2010 revolt and does all he can to prevent new unrest.”

Vytautas Dumbliauskas, another Lithuanian political analyst, agrees that “the region is very ‘non-Russian’ on many accounts. Therefore, if a revolution ever sweeps across Russia, Kaliningrad will seek a special status. But no one can tell when it will happen, or will it ever happen,” the analyst told bne IntelliNews.

With the end of the tax privileges and the likely prolongation of Western sanctions into 2017, Kaliningrad’s dire economic situation might eventually therefore become as explosive as in 2010.

“The situation in Kaliningrad can substantively change over a week or a month. Sometimes just a spark for a major fire is needed,” says Rudnikov.

In other words, in the tussle between the TV set and the fridge, the latter might finally emerge as the victor.

 

 

 

Features

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

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 email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss