Last week, Ukraine began using new methods to strike at the Russian economy, targeting warehouses of the marketplace Wildberries. As a result of these attacks, human losses were also recorded.
As a result of a Ukrainian drone attack on one of the largest Wildberries warehouses in the city of Elektrostal, which was turned to ashes and caused damage exceeding one billion dollars, only one person was killed. He turned out to be an unfortunate Tajik migrant, Navruzjon Sodikov.
This is the human sacrifice that Tajiks living in Russia have suffered as a result of the new wave of Ukrainian strikes on Russian cities. Unfortunately, this is not the only victim. Due to the new methods of warfare, Tajiks in Russia are likely to face material, psychological, and physical losses in the near future, which may prove to be much more devastating than all the previous five years of war.
First, a brief overview for those who are not yet familiar with the activities of the company Wildberries. Perhaps most people do not even know what kind of company it is.
Wildberries is the largest and most successful marketplace in Russia, which is currently also conquering markets in Belarus and Kazakhstan. The company is considered successful even by the standards of the largest companies in the world. For example, the marketplace Amazon controls 38% of the market in its home country, the USA, while Wildberries already controls 45% of the Russian market. If Russia had not faced sanctions, Wildberries would likely have posed a worthy competition to such internet giants as Amazon and Alibaba. Another major competitor of the company in Russia is the marketplace Ozon. However, it seems that strikes will soon be directed at Ozon’s warehouses as well (during the preparation of this article, information about the first attacks on this company’s warehouses emerged).
The main principle of such companies is the delivery of goods from seller to buyer in a very short time and at very low prices compared to previous market mechanisms. In one sentence – it is not just a business, it is an entire infrastructure through which all of Russia is connected to the country’s economy. When the largest Russian marketplace faces difficulties and suspends its operations, the country faces serious problems.
Since the collapse of the largest Russian marketplace has brought about another serious problem, which is also a consequence of Ukraine’s strikes and is inextricably linked to the crisis surrounding Wildberries, moreover — both of these factors mutually reinforce each other, it is worth stopping to discuss it. This concerns the issue of fires at oil facilities.
Russia is one of the largest producers and exporters of oil in the world. Due to Ukrainian attacks on oil refineries, oil tankers, and pipelines, there are problems not only with oil exports but also with fuel shortages within the country. A fuel shortage means less movement of vehicles, especially trucks, which leads to a reduction in the transportation of goods—from bread and milk to timber, cement, and furniture. Fewer shipments mean less income for producers, intermediaries, transport companies, sellers, and other participants in the supply chain. A decrease in the income of these companies results in delays in salary payments to millions of citizens employed in all these sectors. Delayed salaries mean that people buy less, leading to a drop in demand. A decline in demand means reduced turnover, lower tax payments, and decreased budget revenues. A reduction in budget revenues leads to delays in payments to public sector employees, including teachers, doctors, civil servants, etc. Less money for public sector employees again leads to a decrease in demand and cash flow—and this cycle can continue indefinitely. This is just one example of the damage caused by fuel shortages. Many similar examples can be cited.
Now, however, the largest Russian marketplace is on the brink of bankruptcy and closure. The system, which has been developed for at least two decades and replaced the previous trading model, is making way for something new, but the old mechanism is no longer there—it needs to be created anew.
Let me give an example of the old mechanism. Several thousand Tajiks worked in the markets of Perm and Yekaterinburg. Every day, dozens of trucks departed from there to Moscow for goods. The drivers of these trucks were also Tajiks. Thousands of other Tajiks in dozens of large, medium, and small cities in Russia were doing the same.
A new system has come—the marketplace—and these trucks along with their drivers have been pushed out of the market. Now, the merchant no longer needed to go to Moscow for goods, walk through markets, hire a driver, and so on—all was done through Wildberries. However, now Wildberries is on the verge of collapse.
To restore the old mechanism, at least those very trucks are needed, but they are no longer available. Several thousand trucks are needed. That is, they need to be either purchased or rented. And to buy them, they must either be produced or imported from abroad, which takes years. Suppose the trucks are found—however, there is no fuel, as gasoline and diesel are facing a serious shortage. Launching thousands of trucks to supply merchants with goods, delivering goods by trucks as before, using the old method, will become even more difficult. This is yet another cycle.
Currently, fires at Wildberries warehouses have devastated thousands of entrepreneurs, and this is just the beginning. About 10% of the company’s warehouses have been destroyed so far, and this process is rapidly continuing. Even if Russia finds a way to protect the remaining warehouses, which seems unlikely, it is doubtful that this will save the company. This means that tens of thousands of Tajik entrepreneurs who worked through this marketplace are on the brink of bankruptcy.
Why do I say “only Tajik entrepreneurs”? Because this system is one of the largest employers for Tajik migrants. Each warehouse of the company employed between 5,000 and 10,000 people. At least half of them are migrants. Only at the Wildberries warehouse in Elektrostal, which was destroyed, 10,000 people worked, meaning about 5,000 migrants. In less than a week, more than 50,000 people were left without work.
However, this is just the tip of the iceberg. Each producer working with this marketplace also has its own workers: seamstresses, cutters, managers, drivers, loaders, cleaners, and so on work in factories. Each seller also hires workers. So, when the warehouse closed and 5,000 Wildberries employees were left without jobs, tens of thousands of other people remain unemployed in other links of this chain.
For a seller to be able to directly contact the manufacturer after the bankruptcy of Wildberries, it takes months, if not years. Of course, small businesses are usually very flexible and quickly find new ways to operate, but in conditions where the old system has completely disappeared and the new one is rapidly collapsing, the very concept of “quickly” is very elastic. Even quick adaptation can take several months.
During these months, according to the circles described above, turnover and the purchasing power of the population will decline. That is, even if some of these thousands of entrepreneurs from Wildberries and Ozon return to the market in some other form, they will operate on a much smaller scale—with less capital, fewer employees, and lower tax contributions.
The bankruptcy of thousands of Tajik entrepreneurs as a result of Ukrainian attacks on marketplace warehouses and at least temporary unemployment for tens of thousands of other Tajik migrants employed in this sector will be felt not only at the level of individual households. This problem will reduce the volume of remittances to the country, which largely depends on the remittances of labor migrants, at least for some time. And the decrease in the volume of remittances will trigger the same vicious circles already in Tajikistan itself.
At the same time, economic and financial agencies at their press conferences, which are currently taking place, talk about a sharp increase in GDP (8.5%), an increase in the budget’s revenue part, growth in tax collection, exceeding tax plans, and other achievements. Apparently, the strikes of Ukrainian drones on marketplace warehouses in Russia will echo in the indicators of GDP, tax collections, and the budget of Tajikistan already in the second half of this year.
Abdumanon Sheraliev
