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Is The Party Over? Sanctions And Economic Slump Expedite Expat Exodus From Russia

  • Tom Balmforth

Moscow's legendary nightclub Krisis Zhanra is normally swarming with expats, but now it seems the good times may be coming to an end. (illustrative photo)

Moscow's legendary nightclub Krisis Zhanra is normally swarming with expats, but now it seems the good times may be coming to an end. (illustrative photo)

MOSCOW – Nash Tavkhelidze has been in the expat party business since the 1990s. And in the age of sanctions it looks like the party's over.

Tavkhelidze is the co-owner of Krisis Zhanra, a legendary nightclub and bar in Moscow normally heaving with Western expatriates. There, over the years, he's witnessed swarms of foreigners living it up in the Russian capital. But, these days, those throngs are clearing out, he says.

"Last year was a disaster," said Tavkhelidze, who co-founded Krisis Zhanra in 2005. "Just a couple of guys come now and then, but most of them left."

Westerners living in the Russian capital say the exodus has been visible in the wake of the Ukraine crisis, sanctions, and a sagging economy.

And government figures bear out the anecdotal evidence.

According to the Federal Migration Service, the number of foreigners residing in Russia – excluding refugees fleeing the war in Ukraine -- shrank by 417,000 between January 20, 2014 and January 20, 2015.

That's a drop of almost 5 percent. And what's more, a large chunk of the leavers hail from the West.

In particular, the numbers of nationals from some Western countries have plummeted by around a third and sometimes even by almost a half. The figures, reported by the RBK media holding company, do not distinguish between tourists and expatriates. But they are nevertheless striking.

From January 2014 to January 2015, the number of German citizens decreased by nearly a third, from 348,539 to 240,113.

Over the same period, the number of U.S. citizens in Russia fell by 36 percent, down to 79,337; the number of British nationals is down by 38 percent, to 68,627; the number of Finnish citizens has fallen 39 percent to 46,157; and the number of Norwegians has dropped by 48 percent.

Moreover, the statistics show the exodus accelerating in the second half of 2014.

Alexis Rodzianko, president and CEO of the American Chamber of Commerce in Russia, put the leavers into three categories.

One is expatriates working for large international companies who are being sent home as part of cost-cutting measures in anticipation of a recession in Russia.

Another category includes foreigners working in sectors hit hard by Western sanctions like energy.

And finally, there is the natural process in Western companies of gradually replacing costly expatriate staff with lower-cost local hires.

"I think all three of those factors -- the economy, the sanctions, and the normal replacement of expats with locals -- all three of these contribute," Rodzianko said.

Expats planning to leave gave a variety of reasons for doing so.

"I just don't like where this country is going," said an Australian lawyer, who declined to give his name.

One British lawyer said he and his colleagues are being hit with pay cuts. Another said too many of his top clients were placed on the Western sanctions list.

One French citizen who also declined to give her name said she is paid in rubles by a U.S. construction company. The plummeting Russian currency, she added, amounted to a pay cut she could not afford.

"Like many people, I have some loans in Europe and I just could not afford my loans and my local life here," she said.

Rodzianko said the numbers of Western expats leaving Russia appears to roughly correlate with the reduction in foreign business.

"That seems like a number you hear a lot in terms of business volumes -- reductions of 20-30 percent. I hear that in terms of expectations for 2015," he said.

Sechin Sivankutty, a Moscow resident of seven years who manages Hudson Bar, an expat haunt, says business is down by about 40 percent.

"Most of the people have been withdrawing and getting out of this country. It's noticed at the bar," Sivankutty said.

And back at Krisis Zhanra, Tavkhelidze reminisced about the good old days.

"I remember Moscow in the 1990s when it was really great times," he said. "Maybe now we should say that this is the end of an era, which I hate to say, but I don't know what's going to happen next."

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    Tom Balmforth

    Tom Balmforth covers Russia and other former Soviet republics. He can be reached at balmfortht@rferl.org

     

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