What crisis? Moscow marks 868th birthday with glam metal and plenty of make-up
(Business New Europe – bne.eu – MOSCOW BLOG: Anna Kravchenko in Moscow – September 4, 2015)
There is an old Moscow joke about continuous road repair in the city: When leaving his post in 2010, former mayor Yury Luzhkov said he buried treasure under one of the pavements, hence all the digging. This summer the joke is circulating again.
In the city centre, pavements and streets are being torn up everywhere. Asphalt debris and construction barriers at the start of the main Tverskaya Street block the Kremlin view, and customers of a chic café in the adjoining Kamergersky Lane drink their machiatto with their feet resting on piles of uprooted paving slabs. All around, store and house facades are either still covered up or painted in confectionery colours.
Traditionally, a fresh bout of renovation of central Moscow means one thing – City Day is approaching. But this year, the scale of the work over the summer is unprecedented, despite Russia’s economic crisis caused by rock-bottom oil prices and Western sanctions.
A few months before Moscow’s 868th birthday celebrations, which take place on the first weekend of September, the central streets became almost impassable. Locals complained bitterly about the drilling everywhere and how it was impossible to wear high heels while shopping on the gouged thoroughfares.
The municipal chiefs decided to splash out on the 868th bash, likely to boost national pride at a critical time, and show the world that Russia is uncowed and unrepentant of its policies of the past two years, notably its seizure of Crimea and support for pro-Moscow separatists fighting in East Ukraine. Over 500 events are planned for the City Day weekend, including street festivals, shows, exhibitions, master classes, parades, and a rock concert with Russian artists as a warm-up before the headliners, US glam metallists Aerosmith, make the city tremor. The stage on Lubyanskaya square is ready and waiting for Steve Tyler’s antics beside the giant squat headquarters of Russia’s Federal Security Service (FSB).
Other long neglected parts of the city of 12mn inhabitants also got a make-over and more. After City Hall turned Gorky Park from a decaying funfair into a popular hipster hangout, it also started work on the All-Russia Exhibition Centre (VDNKh), a former display centre for Soviet economic achievements. The park with its fountains and Stalin-era pavilions is under extensive reconstruction but visitors now pour in regardless. This summer, VDNKh got the largest oceanarium in Europe under a reported RUB163bn ($2.4bn) municipal development grant to 2025. And the renovation this year spread beyond Moscow’s central areas to the dormitory suburbs.
Highstreet retailers reel, mall giants grow
But while the money is being funnelled in lavishly from above to dress up the city, businesses on the front lines of retail have been taking a battering.
In the first half of 2015, the vacancy rate in prime locations in downtown Moscow climbed to 11.8%, the highest since 2009, and could reach 14% by the year’s end, according to a report released in August by real estate consultancy Colliers International. Some once flourishing central streets have a vacancy rate of 30% and more, with banks and clothing stores taking the brunt of the closures as double-digit inflation and falling real incomes are forcing Muscovites to slash their spending.
At the same time, modern Moscow’s retail gigantomania seems undeterred: Six new shopping malls with a total area of 343,000 square metres opened in the city in the first half of the year, a record for Russia’s capital. The simple explanation is that Moscow’s business is also responding to the economic crisis faster than elsewhere in the country. Now in sink or swim mode, many clothing retailers migrated to the malls, while fast food outlets and low- and mid-range grocery stores found new opportunities in the vacant spots. The extravagant restaurants that proliferated during the wealthy noughties were the first eateries to go. Some budget options, like the sushi-focused Yaposha chain, also fell by the wayside, hit by the ban on imported ingredients and surging fish prices.
The sanctions still hit both expensive and cheaper options hard, though, says the owner of one restaurant in the busy central Kitai-Gorod district. “Sanctions affected the entire restaurant business – the product range decreased and the quality declined. People are spending less, there are fewer visitors, which especially became apparent in the last seven to eight months,” he says.
The peculiarity of this crisis, according to the restaurateur, is the deeply depressive mood among business owners. Even if the recession does not last long, many will give up, he believes. Adding to the wider economic pressures, the recent ban on smoking in cafes and rising parking prices emptied the cafes in the centre, the businessman says. “All of this is finishing off a once thriving industry.”
Fight another day
And yet the general impression before City Day is not of decline but rather a determined regrouping of forces. Apart from the faded rental ads, there are “coming soon” announcements. The super expensive stores and restaurants of the golden oil era are out and the cheap, canteen-style joints are in. There are trends, and those who catch them survive.
Muscovites are stoically adjusting, too. They now spend less on salons, fitness, dry-cleaning and custom tailoring. From the beginning of 2015, companies’ revenue in the personal services sector decreased by 15-20%, according to the entrepreneurs’ union Opora Russia. So it looks like Muscovites learned to count money, and Moscow authorities should probably do the same.
Amid a general Kremlin message that Russia will weather the sanctions, fill gaps left by foreign goods with its own products, and bounce back with more oil than ever, Fyodor Tyutchev’s old maxim would seem to hold true for its people: “You cannot understand Russia with the mind … you can only believe in Russia.” Or in keeping with the hip party feel, Aerosmith might also play their slightly amended track “A lick (of paint) and a promise” in their set.
While Moscow is far removed from the lives of most Russians, Tverskaya and its surrounds are fairly reflective of the upheavals and responses to them. For example, the Mexican restaurant at the Kremlin end of Tverskaya, a tourist hit for some two decades, has finally shut down. And as Russia continues to build up its military muscle, the T-Shirt store next door has suddenly transformed into “Army of Russia”, selling military paraphernalia, boots, tents and surplus kit that would ordinarily look out of place at the top of a capital’s main street.
The store also tips its hat to a key event of the Cold War era: Commemorating the occupation of Crimea in February 2014 by thousands of tacit, masked Russian troops, a range of novelty mugs depicts a rifle-toting soldier and warns “Caution! Polite people”.