Moscow underground: Speakeasies and illegal barbershops flourish in lockdown-strangled Russia

Abandoned by the government in the middle of a pandemic, small businesses have taken to operating in the shadows, reports Oliver Carroll from Moscow

Moscow’s lockdown has resulted in a speakeasy culture for those in the know (Reuters)

You wouldn’t be any the wiser looking in from the outside. The windows are blacked out; there are no signs over the door. Entry is for the initiated only. Those who know call ahead to get on a guest list, press the right buzzer, and wait to be escorted in.

What lies on the other side of the door would in normal times be considered unexciting: A dozen people socially distanced, drinking in lonely silence in a nondescript beer hall. But 2020 has devalued many things, and thresholds for kicks are first among them. In the reality of a Covid-19 pandemic, any drink in public is positively subversive.

The bar, a small neighbourhood affair in southern Moscow, is one of a growing number of businesses opening up in defiance of Covid-19 lockdown rules. Authorities are apparently already aware of the bar’s clandestine activity, but seem unable or unwilling to properly shut it down. According to one local resident, a police team raided the place earlier this month, removing beer kegs. But a few days later, the venue was trading again, having sourced more booze.

On paper, Moscow is two months into one of the world’s strictest coronavirus-provoked lockdowns, with little indication of a major relaxation in sight. According to the regulations, which were introduced by mayor Sergei Sobyanin on 28 March, all but essential businesses should be shuttered to the public. Yet while nearly all enterprises continue to observe the prohibition order, a select few are daring to start up again, risking fines of up to 500,000 rubles (£5700) in the process.

Taking cash only, these bars, hostels, restaurants, barbershops, and beauticians operate with schemes reminiscent of the American Twenties. There are codewords, secret chat groups, telephone numbers, and changing addresses for those in the know. This reporter tried his luck booking a haircut in central Moscow – being told one address, then another nearby forty minutes later, before cancelling.

The party has hardly stopped for those on trusting terms with owners. Some of Moscow’s most fashionable drinking holes have remained open throughout the pandemic, an industry insider says. They operate as modern-day speakeasies for friends and VIPs: “It’s not a big deal for them to put on parties since the staff is there anyway. Of course, they do it behind closed doors in rooms without windows.”

The source, who asked to remain anonymous, says that some owners considered the illicit business a “just” response to being abandoned by the government during the pandemic.

The coronavirus crisis has divided businesses into three types, he says. The first, the minority, are “those with good cashflows and negotiable rents”; they can survive the crisis easily. The second are those who have already admitted defeat and are simply “waiting for the water to submerge them”. The third group are those who are trying to get by in “whatever which way”, through means legal and not.

“In my eyes, the third group are the ones who are true entrepreneurs,” the source adds.

Even as the crisis threatens to sink many small-scale businesses that cannot operate remotely, Vladimir Putin and his government has shown little inclination to offer a hand. While the Kremlin enjoys enviable foreign currency reserves – at $562.9bn (£547bn), the fourth highest in the world – it has made clear it intends to hang on to the money for its own purposes.

This pandemic will leave Russians impoverished and back to buying the cheapest they can. In practical terms, that means they won’t be buying Adnams IPA, but Stolichnaya vodka

Igor Mirof, bar owner

Government support to small and medium-sized businesses has been minuscule: short tax holidays, subsidised loans, and, belatedly, micro-grants that few are eligible to claim. Russian business has not benefited from the kind of furlough schemes that have been rolled out by western governments. On the contrary, firms have been obliged to pay staff through months of “holiday” despite their near-zero cashflows. In one survey of small businesses, just 5 per cent said the government had done or looked like they were doing anything to help them.

Anastasia Tatulova, a restaurateur who employed over 1,000 people before the crisis hit – that number is now down to 150 – says authorities appeared intent on pushing business into illicit economies.

“You can’t blame people for trying to survive,” she says. Out-of-touch bureaucrats had created a ”desperate” situation by failing to support business, and they themselves would now suffer from a reduced tax collection: “We’ve regressed to a cash and barter economy with money in jars, rent in cash, wages in envelopes, taxes for fools, and restaurants once a year for the wealthy.”

Tatulova came to prominence at the start of the pandemic, when she took President Putin to task in a memorable exchange that went viral among the business community. “I’ll try to appeal to you without tears,” she told him, ”but it’s a tragedy.” The businesswoman says at the time she felt comforted by Putin’s reassuring answers, but his warm words failed to result in any significant change in government policy over the following two months.

Igor Mirof, owner of a small bar in central Moscow specialising in upscale, imported beers, predicted the crisis would send the hospitality sector back “decades” and cause as much as a third of businesses to close. International distributors have already understood the direction of flow, he says. Some have already left the Russian market, while others are reducing headcounts to a fraction of former numbers.

While the entrepreneur expresses hope his own bar would be allowed to reopen in June, he says that would only mark the beginning of a new stage of crisis.

“This pandemic will leave Russians impoverished and back to buying the cheapest they can,” he says. “In practical terms, that means they won’t be buying Adnams IPA in my bar, but drinking Stolichnaya vodka at home.”