Russia Update: Merchants Warn of Serious Price Hikes Due to Platon Toll Payment System

December 10, 2015
Activist truckers gather in front of a sign that says "No to Platon," referencing a toll payments system. Photo by Valery Matytsin/TASS

Manufacturers and merchants of staples warned Prime Minister Dmitry Medvedev of the likelihood of sharp price hikes as the New Year’s holiday approach due to the introduction of the Platon toll payment system, the target of truckers’ strikes.

Welcome to our column, Russia Update, where we will be closely following day-to-day developments in Russia, including the Russian government’s foreign and domestic policies.

The previous issue is here.

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Russian Capital Flight Estimated at $60 Billion for 2015

Russian business people have withdrawn at least $60 billion from Russia in this year, a lower figure for capital flight than has been posted in past years, TASS reports.

Anton Siluanov, minister of finance reported that the outflow of capital was far less than last year, and was slated to reach $60 billion by the end of the year (translation by The Interpreter):

“The outflow of capital has significantly slowed, this is also a measurement of our actions in the area of budget policy. The outflow for 11 years was $53 billion. Our estimate is $60 billion by the end of the year, and that it twice as low as what was made in initial assessments.”

What Siluanov neglected to explain, however, is that last year in 2014 — when Russian annexed Crimea, invaded the Donbass and suffered Western sanctions — capital flight was “massive,” according to Moscow Times, and at $151.5 billion, double what it was in 2013, AFP reported.

That trend prompted estimates of $70 billion in capital outflow this year, but it appears that it will fall shy of that amount, possibly because businesses simply have less capital to export, with the ruble crash devaluing their revenue and savings.

President Vladimir Putin himself admitted in his annual address to parliament that a government program to offer a “capital amnesty” was moving slower than hoped. He urged officials to step up their work to facilitate returns — a process that may get some unanticipated boost from new sanctions against travel, food and other businesses in Turkey, a haven for Russian business. Now Turkey has been declared to have “stabbed Russia in the back” and served as “accomplices to terrorists” for shooting down a Russian war plane that strayed into Turkish air space near the Syrian border.

— Catherine A. Fitzpatrick

Russian Merchants Warn of Serious Price Hikes Due to Platon Toll Payment System, Target of Truckers’ Strikes
Manufacturers and merchants of staples warned Prime Minister Dmitry Medvedev of the likelihood of sharp price hikes as the New Year’s holiday approach due to the introduction of the Platon toll payment system, the target of truckers’ strikes, reported.
Twenty trade organizations including the Fish Union, Grain Union, and National Meat Association have appealed to the government citing problems with equipment shortage and 
technical difficulties. Small and medium freight companies without sufficient trade volume are refusing to take deliveries, Kommersant reports.
The Milk Union calculated that the existing tariff of 1.53 rubles per 1 km (about 2 cents) will lead to a rise in the price of 1 kg of milk (about 2 quarts) by 1.2 rubles; the increased tariff planned (3.73 rubles per 1 km or about 5 cents) will add 2.5 rubles to the cost of milk (3 cents).
Truckers from a range of regions from Nizny Novgorod to Dagestan have been organizing strike convoys to protest the new higher road tolls on the Moscow Ring Road surrounding 
the center of Moscow. But their activism was dampened last Friday December 5, when police blocked them in Khimki, a suburb of Moscow after a 13-kilometer traffic jam was created.
Some truckers from Dagestan reported that they were unable even to leave the republic — traffic police stopped them and made them sign statements that they were not going to Moscow to protest and took down their license place numbers and ID, Magomed Badayev, a driver from Khasavyurt told  “Then we understood we were powerless. Now I am headed to Moscow with an ordinary run to deliver freight.”
Later reported that the traffic hold-up had been caused not by the truckers’ convoy, but by Prime Minister Dmitry Medvedev and Moscow Mayor Sergei Sobyanin and their security escort as they visited a disabled children’s center.
Earlier the truckers had achieved a delay in the plan to impose heavier fines for overweight loads, but vowed to continue their strike until they were abolished, although some observers though they were winded by the official pushback.
Kremlin spokesman Dmitry Peskov claimed that the topic was only the concern for the Ministry of Transport, but then propagandists stepped up sentiment against the strikers, 
deploying Aleksandr Zaldostanov, leader of the Night Wolves motorcycle club and participant in the Anti-Maidan movement to urge truckers to sacrifice for the good of the Motherland. Social media filled up with massive numbers of tweets from bots claiming to be truckers’ daughters afraid a Maidan might start in Russia.
Even so, says, the truckers remained in a protest camp and regrouped, and in the mean time picked up support not just from the Communist Party of Russia Federation, 
which had staged a demonstration in support of their cause, but also the LGBT movement, reported.
The Alliance of Heterosexuals and LGBT for Justice staged a picket in St. Petersburg and released a statement, reported (translation by The Interpreter):
An additional tax, collected by a non-competitive private company from small business during crisis times contradicts not only the promise moratorium on tax hikes promised by the government but common sense. The exorbitant appetites of the private company for its activity — 10.5 billion rubles a year from the budget when there isn’t enough money for the most needed medications is a truly a mockery.
Their reference was to Arkady Rotenberg, a close associate of Russian PResident Vladimir Putin whose company owns Platon.
Despite the growing animosity to Platon, the government is doubling down. Today December 10, Vice Premier Arkady Dvorkovich denied the claims in the producers’ appeal, and while admitting that the new tariffs “may have an effect on prices,” this would be “only by tenths of a percent,” RIA Novosti and RosBalt reported.
He said he would meet with the heads of the food unions and “discuss everything in a calm vein.”
He discounted the need to declare a moratorium on the tariff hikes, or to withdraw the Platon system, which went into effect November 15 and is due to increase after March 1. The funds collected from it go into the federal budget and are then distributed to the regions “including for state and private partnership.” As Dvorkovich explained:

We calculate that the total volume we will receive next year will be more than 40 billion rubles and this will enable ut to allocate a payment to the concessioner and use the money of the road fund for specific investment projects.

Critics of the system are concerned about corruption and kickbacks, as they were with the huge contracts obtained by the Rotenberg brothers in the Sochi Olympics. Russia’s lack of good highways is a major impediment to development, and Russian Railways, which takes the place of a highway system in many remote areas has cut back service and has been the subject of allegations of corruption.

— Catherine A. Fitzpatrick