A18 EZ RE THE WASHINGTON POST.SUNDAY, APRIL 3 , 2022
war in ukraine
BY ROBYN DIXONRIGA, Latvia — It did not take long
for Russian businessman Kirill
Kukkoyev to feel like he had been
taken hostage by the events un-
folding in neighboring Ukraine.
That moment came eight days af-
ter Russia’s invasion when Swed-
ish furniture giant Ikea an-
nounced it would halt trading in
Russia the next day.
Kukkoyev had built an entire
business renovating high-end
apartments in St. Petersburg with
Ikea fittings. He spent that final
day sweating and trying to get in
all his orders, hitting the payment
button for the last time at two
minutes to midnight, he recalled.
Then he applied to register the
trademark Idea, copying Ikea’s
trademark logo.
Kukkoyev’s struggles are one
man’s woes in a sea of troubles as
Russia faces not just international
sanctions but also the impact of
Western businesses shunning the
country. Thousands of small and
medium businesses — including
restaurants, bars, beauty salons,
consultancies, transportation, lo-
gistics companies and others —
face similar problems.
As real wages plummet, con-
sumption falls, inflation escalates
and supply chain problems choke
the economy, the crisis is devastat-
ing private businesses.
“[My clients and I] are now like
hostages of this situation. I believe
that Ikea treated people like cat-
tle,” said Kukkoyev, owner of Luk-
sort-Service. “I think it was very
inhumane. Now, so many people,
thousands and thousands of peo-
ple, are in a very difficult situa-
tion.”
Until last month, he had been
Ikea’s biggest fan. He said he had
admired the company’s business
approach and loved its user-
friendly manuals, on which he re-
lied heavily.
“I’m not upset at the West. The
only thing that made me really
upset and angry was Ikea, because
I really like this business,” he said.
Russians are facing a slew of
economic problems, from a short-
age of paper — it’s bring your own
to many clinics for printing diag-
nostic reports — to a lack of West-
ern medicines, spare parts and
computer chips.
Last week, the price of staple
goods in Russia soared 14 percent
in a single week, according to the
Federal State Statistics Service.
Panic buying of sugar erupted as
its price increased by more than 37
percent, triggering an official
a nti-monopoly probe.
An analysis by Vneshekonom
Bank Institute issued March 22
predicted that real wages would
fall by 12 percent this year, unem-
ployment would hit 6.2 percent
and inflation would reach 19.
percent by the end of the year.
Independent economist Vladis-
lav Inozemtsev warned that in a
few months, manufacturers will
run out of affordable stocks of key
components. “The most acute is-
sue will be with all the Western
products and spare parts and ev-
erything that Russia uses in the
production chain because some
Russian products will disappear
completely if they can’t find neces-
sary substitutes, for example com-
puter chips,” said Inozemtsev, di-
rector of the Center for Research
on Post-Industrial Societies.
He said the quality of manyproducts will decrease even as
their prices rise. “Everyone heard
about the problems of paper, with
a disruption of supply for two or
three weeks. Then it reappeared in
shops, but the price was 2^1 / 2 times
higher, and it was not so white,” he
said.
But Sergei Guriev, an economist
at the Paris Institute of Political
Studies, said that as long as Russia
can continue to sell all the oil it
wants at more than $100 a barrel,
it can fund the things that matter
most to President Vladimir Putin:
the war effort, propaganda to sup-
port it and security services to
clamp down on dissent.
“Putin doesn’t care about eco-
nomic growth. He wants to sur-
vive,” Guriev said. Putin’s concern
is primarily with the people
around him, because some of
them are unhappy that they are
seeing their businesses harmed
and the military campaign strug-
gling. “So he won’t provide in-
comes to [the public] but instead
he will deliver repression. In that
sense, what matters to him is hav-
ing enough oil money to pay po-
licemen, propagandists and sol-
diers, and his friends,” said Guriev.Vanishing tiles and
disappearing clients
For Kukkoyev, problems cas-
caded like dominoes. His beloved
Ikea panels and fittings were no
more. He substituted Russian tiles
for the Italian tiles prized by his
richest clients.
“Our clients had a certain pic-
ture in their minds of their apart-
ment. Now the picture is differ-
ent,” he said. In his 74 ongoing
projects, he said, clients will pay
“three, four and even five times
more,” with inferior tiles, light fit-
tings and panels.
Since late February, his richest
clients have been disappearing,
too. One wealthy client, who
works in logistics, canceled a reno-
vation project “because his busi-
ness was falling apart,” Kukkoyev
said. Another canceled because
sanctions had hurt his business. A
third broke his contact because he
could no longer afford expensive
fittings.
Kukkoyev has turned around
and sued Ikea, seeking damages of
four quadrillion rubles — almost
$12 trillion — in addition to pursu-
ing the Idea trademark.
An Ikea spokeswoman namedMaddie, who provided only her
first name, said the company was
considering taking action of its
own. She said that Inter Ikea Sys-
tems B.V., the owner of Ikea intel-
lectual property rights including
the trademarks, was aware of Kuk-
koyev’s trademark application
and was looking into the matter
“to explore the potential steps for
actions.”
While Putin’s government can
curb discontent among his loyal-
ists, for instance by indexing pen-
sions to inflation and supporting
state-owned enterprises, it is peo-
ple like Kukkoyev’s clients who
will be most affected by economic
hardships: “people in urban cen-
ters who have been accustomed to
Western standards for all these
years,” said Inozemtsev.
“It will hurt the upper middle
class because these people con-
sume most of these advanced
products which need high tech
components. Good computers will
be in short supply, and mobile
phones,” he said.Settling for haircuts instead of
colorings
The sectors that look to be hit
the hardest include advertising,
travel, hospitality, fashion, luxury
goods and services.
Restaurateurs are unable to
source fish, vegetables, pasta, sal-
ads, sauces and other key items,
Sergei Mironov, vice president of
the Federation of Restaurateurs
and Hoteliers, told the pro-Krem-
lin Izvestia newspaper Monday.
One Moscow cocktail bar own-
er, who spoke on the condition of
anonymity for fear of reprisals,
said the business he started just
over a year ago would probably
survive only three to six months,
after major alcohol importers
stopped shipping goods to Russia.
Large nonstate manufacturers,
such as Russian carmakers, that
are reliant on imported high-tech
electronics and chips are also
struggling.
Sofia, 43, who owns a beauty
salon, was about to open a new one
when the war began. She aban-
doned her plan as her business
swooned and her income plum-
meted. Even her few loyal remain-
ing clients are cutting costs.“For example, they will just
have a haircut, not coloring. Or a
manicure without nail polish,”
S ofia said. She spoke on the condi-
tion that her last name not be
published because of fear of reper-
cussions from Russian authori-
ties.
“People are depressed. They’re
worried. Usually, clients come to
my studio in a good mood, but it’s
not like that now. People are wor-
ried about prices. They are trying
to save on everything because they
don’t know what happen in the
future,” she said.
Sofia said her clients are accus-
tomed to her use of Western prod-
ucts because of their quality. Now,
she said, “I don’t know what I will
use.”Richer than North Korea and
Iran
With Putin unlikely to back
down from his confrontation with
Ukraine, sanctions on Russia
could remain in place for years,
Guriev said. “It will be much richer
than North Korea and Iran, but it
will be economically isolated, and
it will not grow. Incomes will be
substantially below last year’s lev-
els, so it will be in a kind of pover-
ty.”
He predicted that the increas-
ingly repressive government, cou-
pled with economic misery, will
make Russia an unpleasant place
to remain. “A lot of educated
young people will leave, simply
because there’s no future,” he said.
“There is no way to do business, no
way to make tenure, no way to
become a successful professional.”
Sofia said she hopes her beauty
salon will somehow survive.
“It feels like we have gone back-
ward hundreds of years. We had
plans. ... I don’t see anything good
in the near future,” she said.
Kukkoyev’s big idea, copied
straight from Ikea, is to sell de-
cent, affordable furniture, just
Russian-made.
But if it gets off the ground, it
probably won’t match the compa-
ny he once loved. The furniture —
like Russian paper — will probably
be expensive and inferior.Mary Ilyushina contributed to this
report.Russian economy, businesses adjust to lack of Western products
LUKSORT-SERVICE
Kirill Kukkoyev, pictured, is suing IKEA after they stalled operations in Russia last month. Kukkoyev
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