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Russians’ Anxiety Swells as Oil Prices Collapse

Workers at a Sbarro restaurant in Moscow protested, claiming they had not been paid in months.Credit...James Hill for The New York Times

KRASNODAR, Russia — Last year was bad enough financially for Sergei and Victoria Titov, both music teachers getting along in years. Her government salary was slashed by one third, and rampant inflation put some basic groceries like eggplant and cucumbers out of reach.

Then came Jan. 1, and the abrupt decision by the regional government here in Krasnodar, the capital of Russia’s southern agricultural heartland, to chop transportation subsidies for older Russians, forcing the couple to limit their trolley rides.

Indignant and fearing worse amid Russia’s accelerating economic problems, Sergei joined an unauthorized demonstration last week by hundreds of older Russians who gathered under the bronze statue of a Cossack horseman on the main square here and chanted, “Return our benefits!”

They were not alone, neither in Krasnodar nor across this vast nation, where illegal protests and wildcat strikes are erupting with increasing frequency by truckers, teachers, factory workers and all sorts of Russians facing steep government cutbacks because of plummeting revenue from oil and gas.

The global collapse in oil prices is reordering economic relations around the world, but the change is particularly daunting for Russia, which relies on energy exports for 50 percent of its federal budget.

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Sergei Titov, 64, outside the Krasnodar regional administration building in southern Russia, where he recently took part in a demonstration against cuts in income for Russian pensioners.Credit...James Hill for The New York Times

In December, President Vladimir V. Putin told the nation that the worst of the recession — the economy shrank 3.9 percent and inflation hit 12.9 percent in 2015 — was over and that modest growth would return in 2016. He has been pushing the oil collapse as an “opportunity” that will wean Russia off energy imports and diversify the economy.

Then in January oil fell below $30 per barrel, with no bottom in sight, and the ruble hit a record low of nearly 85 to the dollar before recovering slightly.

The last time oil prices dropped so low and stayed there, in the 1980s, the Soviet Union disintegrated. Steadily rising prices since 2000 have lifted Russia out of poverty and economic chaos, buoying the prosperity of many Russians with it. Mr. Putin was lucky enough to be president for much of that period, but he now faces an extended decline, with real incomes shrinking.

With the federal budget approved in December based on oil at $50 a barrel, Anton Siluanov, the finance minister, announced that the country faced a budget deficit of about $40 billion, and ministries were ordered to cut spending 10 percent. Budgets were similarly guillotined last year.

In Krasnodar, Mr. Titov, 64, braced for harder times. “I do not know what they will cut, but I know it will affect us,” he said. “We are watching all this with alarm. It is clear that the government lacks the necessary resources to give us a normal life.”

In Krasnodar, a city of about 800,000 people, retirees register a kind of sticker shock when discussing food prices, yelling out items as they remember newly high prices. “Apples!” one shouted, noting that the cost had nearly doubled. Then “Zucchini!” Then “Smoked sausages!”

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Appetite for Patriotism in Moscow

Some restaurants are turning sanctions into an opportunity to celebrate traditional food.

Natalya Tuktarova, co-owner of pastry studio Markus Pastry : If life gives us a lemon, we try to make lemonade out of it. TITLE - Appetite for Patriotism VO For over a year restaurants in Russia have been caughtvv between Western sanctions and Kremlin’s retaliatory ban on food imports from Europe and the U.S. Yelena Markus, co-owner of pastry studio Markus Pastry: WE CLOSED [our] RESTAURANT AND OPENED AN ONLINE PASTRY SHOP. Natalya Tuktarova, co-owner of pastry studio Markus Pastry : Since in Russia it’s is cheaper to eat at home, during the crisis many organize parties at home. And since not everyone would bake a cake, many order cakes from online confectionaries. VO The mother and daughter behind this online pastry shop had a restaurant in downtown Moscow for four years. Even before the economic pinch, a smoking ban and new parking regulations were hurting business. Sanctions limiting access to some ingredients and the fall of the ruble were the final straw that closed many restaurants, but it also forced chefs and their customers to think a little outside the box. Yelena Markus, co-owner of pastry studio Markus Pastry: Yelena: Sanctions affected for the most part food products not used in the confectionary production. We use flour, eggs, sugar produced in Russia. Anna Shpak, 15 sisters, managing partner THIS WHOLE STORY BROUGHT A BIG WAVE OF PATRIOTISM. These are too far apart from each other with the sign edited in the middle. The sign maybe comes beforehand or after? PEOPLE ARE DINING IN RUSSIAN PLACES. Places where they know the food. THERE IS A FASHION FOR ALL THINGS RUSSIAN BECAUSE OF THE SANCTIONS. Honestly, we like it. VO: — Anna Shpak, 15 sisters, managing partner WE DON’T NEED PARMESAN, WE DON’T NEED FRENCH expensive CHEESE, WE DON’T NEED JAMON. SO EVERYTHING WE NEED CAN BE FOUND IN RUSSIA.” Bayish, 15 sisters, senior cook, Central Asian cuisine ALL PEOPLE COME AND ORDER OUR ENTREES WITH A PLEASURE OF NOSTALGIA. Ilyin, Afisha magazine restaurant critic People usually remember only the good things, so there is a nostalgia now for all things Soviet. We forgot all the bad things, we remember all the good things, the fifteen republics, the fifteen sisters. —” Fifteen Sisters simply pushed it to the limit. VO: Even chefs who specialize in foreign cuisines found ways to work a little more locally. NAT - Valentino with Elena: “Everything is fresh. I’m fresh, too. ” Elena Olshanskaya, guest at Pinzeria GOOD FOOD is hard to find the good one because of limited number of good quality ingredients. BUT SOME RESTAURANTS ARE BEING CREATIVE WITH THAT Valentino Bontempi, chef at Bontempi and Pinzeria restaurants When the crisis began, I realised that the most important thing was not to lose diners. I’m from Brescia, Lombardy. I’ve been working as a chef for 35 years. I currently work in Moscow. I opened Ristorante Bontempi five years ago. - NATPOP - Bongiorno! It is frequented by glamour. The average price is quite...um...it is quite high. So the sanctions spurred me to open a more democratic restaurant, affordable for everyone. Valentino Bontempi, chef, Pinzeria and Bontempi Working in the restaurant sector has become more complicated.] Products imported from new markets, such as Argentina, Tunisia, Morocco, Israel, came under a price change. They were .....more expensive. Maxim Kuleshov, pizza maker, Pinzeria Mozzarella and burrata that we sell here are made in Russia. By Italian brands, licensed recipes. So they have similar quality, but don’t get sanctioned Natalya Tuktarova, co-owner, Markus Pastry All crisis are really opportunities. Yelena Markus, co-owner, Markus Pastry The main advantage of an online pastry shop is that we could pick a less trendy location and pay less rent and charge less money for our products. We are developing to become one of the most technologically advanced confectioners in Moscow. The most convenient for our clients.) I think, Russian soul is wide and Russian people aren’t famous for managing personal finances, so they can’t deny themselves for long.

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Some restaurants are turning sanctions into an opportunity to celebrate traditional food.CreditCredit...Sergei Chirikov/European Pressphoto Agency

Food prices rose 20 percent last year, according to official statistics, but often Russians say their grocery tab is up by a third or more, thanks in part to sanctions Moscow slapped on Western food imports in retaliation for sanctions the West imposed over Ukraine.

Sergei Galustian, 65, a retired police officer, lives on a downtown street with just 27 houses, their proximity making it easy to assess change.

“Nobody is starving yet, but incomes are definitely down,” he said, noting that homes are colder, that neighbors turn on just two lamps after dark where they once used five and that people have stopped buying new clothes. Retail sales across Russia were down by 13.1 percent for the year ending in November, according to official statistics, with car sales off nearly 40 percent.

The 100 or so workers at the giant Seydin Machine Tool Factory, once the pride of the city during the Soviet era, have not seen a paycheck for a year and recently received layoff notices. They, too, have on occasion gathered in the main square to demand their back pay. The workers “have to take to the streets!” they wrote in an open letter to Mr. Putin.

In a tradition dating from Soviet times, most firms, and especially state-run companies, tend to cut hours or stop paying salaries rather than fire people to diminish the chances for social unrest.

In Moscow on Wednesday, about 15 employees of Sbarro, the pizza chain based in Ohio, stood in the brutal cold outside one franchise holding signs saying, “Give us our money.” Several said they had not been paid for at least three months.

“They just tell us they have problems,” said Sergei Yudichev, 50, a driver for the chain for more than two years.

Albeit poorer, Russia remains a petro state, so there are pockets of plenty. Rolls-Royce reported a 5 percent jump in sales last year, the rich splurging as the value of their assets nose-dived.

Others just seemed oblivious. Moscow’s City Hall advertised for tenders for its banquets, noting that menu items should include foie gras and Parma ham (which is banned elsewhere in Russia because of sanctions).

Social media erupted in mocking resentment. One Russian quoted a famous line by the Russian poet Vladimir Mayakovski from the 1917 revolution, “Eat pineapples, munch your grouse!” and left unstated the second line, “Your last day is coming, bourgeois!”

Russia pumped record amounts of oil last year, nearly 11 million barrels per day, but that pace will not save it in the current global glut. The main government strategy so far seems to be to cut spending and to rely on its reserves until oil prices improve.

Russia has around $360 billion in foreign currency reserves and some $120 billion in two rainy day funds, down from just under $160 billion a year ago. At current spending rates, however, the two funds are expected to last only 18 months. It might also sell significant stakes in state-run companies like the oil giant Rosneft or Sberbank, and it will not increase military spending.

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Sbarro workers protesting in Moscow. Russia’s economy is dependent on oil, so revenue falls in tandem with oil prices.Credit...James Hill for The New York Times

Mr. Titov, a veteran organizer for the Communist Party, said he felt the economic problems were contributing to a corrosive sense of drift. “Russia always lived with some manner of national idea, a goal: We were building socialism and communism,” he said. “But there is no national idea. Now, we just go with the flow and it is not clear in what direction.”

Russian involvement in wars in Ukraine and Syria has swelled the general whirlpool of anxiety, with the possibility of a global war discussed on state-run television. Some analysts accuse the Kremlin of deliberately seeking overseas adventures to distract people from domestic economic woes.

“People are more alarmed and more tense, because now we are speaking not only about their well-being, but their lives in general,” said Valery Fedorov, director general of the government-owned Russia Public Opinion Research Center, known by its Russian initials, Vciom.

Many analysts expect people to do what Russians always do in hard times — hunker down, tend to their vegetable plots and wait it out. Others say that Russians have gotten used to a higher standard of living and that they will protest losing it.

The government allows street protests over issues like lost wages, but its distinctly authoritarian edge emerges in the face of political action.

So far, local governments have reacted lightly to the protests. The governor of the Krasnodar Region restored transportation passes for the older Russians receiving the lowest pensions.

Some residents, like Mr. Titov, groused that the wealth was being wasted on prestige projects rather than helping ordinary people. Still, he does not expect Russians to sour on Mr. Putin any time soon. In nearby Sochi, Russia spent around $50 billion to host the 2014 Winter Olympics, and a similar construction juggernaut is building stadiums nationwide for the 2018 World Cup.

“The Russian people got what they wanted, a czar ruling the country,” he said of Mr. Putin. “What we need is an effective manager, but what we got is the Olympics, soccer and war.”

Alexandra Odynova contributed reporting from Krasnodar, and Ivan Nechepurenko from Moscow.

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A version of this article appears in print on  , Section A, Page 1 of the New York edition with the headline: Plunging Oil Prices Feed Worker Unrest in Russia . Order Reprints | Today’s Paper | Subscribe

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