RUSSIA: Foreign Vendors Face the Boot

By Kester Kenn Klomegah Reprint | | Print |

Kester Kenn Klomegah

MOSCOW, Mar 31 2007 (IPS) - Foreigners engaged in retail trade and food product markets face a ban on doing business from Sunday.

The affected foreigners are mostly from former Soviet republics where incomes are low and living costs have risen astronomically. This has forced many to seek menial business in Russia.

The move would disrupt lives and violate principles, some experts say.

“Clearly, such a measure will not promote free trade. Such restrictions represent an infringement of the values of free trade,” chief economist at MDM Bank in Russia Peter Westin told IPS.

“That said, the business and investment climate in Russia has improved since the 1990s, and the ban is limited to retail markets and outdoor bazaars, and thus will not have a significant impact on the overall macroeconomic course.”

A possible effect of a total ban on foreigners in outside markets could be a shortage of workers, he said.

“With foreigners banned, in order to continue to operate, these people will have to be replaced by Russians. Unemployment in the big cities is now close to zero, so in order to attract Russian workers, salaries most certainly will have to go up. This will affect the businesses by way of increased costs, and thus lower margins, unless retail prices are also raised.”

Corruption is a likely fallout, with officials being paid to allow foreigners to continue to work, he added.

The vendors have no trade associations to defend their rights.

“They are faced with a genuine problem of eviction but unfortunately they are not organised traders and not unionised, which makes their case defenceless,” researcher on the socio-economic aspects of labour at the Federation of Independent Trade Unions Nina Kuzmina told IPS.

But their departure may not leave a gap, she said. “If they are forced out of the markets, only temporary food shortages are likely because there are strong indications that Russians are prepared to fill those places,” Kuzmina said.

Last year President Vladimir Putin at first asked the government to encourage controlled immigration from former Soviet republics. But in October Putin ordered a tightening of immigration rules and a crackdown on the retail markets, saying the presence of aliens threatened the native population.

Interior minister Rashid Nurgaliyev said there were an estimated eight million to 12 million immigrants who had crossed the borders into Russia to escape poverty at home.

The State Duma, the lower chamber of the Russian parliament, hastily passed a bill in January setting tight work permit quotas and imposing stiff penalties for illegally employing foreigners. It also fixed the percentage of foreigners permitted to work in the retail trade at 40 percent till the end of March, after which they would be barred from work throughout the country.

Migrants are already not allowed to sell alcohol and pharmaceuticals under the new law.

The government plans to impose the law forcefully. Economic development and trade minister German Gref told parliamentarians in January that if the new legislation proved ineffective, the government would strengthen it.

In a recent survey 75 percent respondents supported the government’s plan to phase out foreign traders in markets and small retail outlets. The poll, conducted by the state owned VTsIOM agency in 46 regions across the country, showed that only 18 percent of Russians opposed the plan.

The new law will reduce the inflow of illegal immigrants and increase the possibility for Russian peasant farmers to make profits from their own production, Vladimir Katrenko, spokesman for the State Duma Committee on Nationalities told IPS.

“This will serve not only as additional impulse for the development of domestic agriculture, but also will create new work sites in the sphere of market trade for the citizens of the country.”