Moscow stares into the abyss
I didn't travel to Moscow to write about the crisis, but rather to be with my wife, Lena, a Russian who is temporarily living and working in Moscow, financially and emotionally helping her family through the travail of her aging father's eerie and metaphoric paralysis. Yet during my 10-day visit, the ruble collapsed, and I found myself on Moscow's streets and in her kitchens and living rooms, listening to the reactions of the people most affected by the week's chaos. The feeling was that of a city, like its currency, slowly sinking.
In that last week of August, as the Democrats, the Communists and President Yeltsin (whose influence was waning by the hour) haggled over a new balance of power, exhausted Russians watched prices soar. On Friday of that week, Lena eyed a pair of shoes in a department store marked at 450 rubles. When she returned on Sunday, they'd been re-tagged at 1,300 rubles. Imported sunflower oil shot up from 8 rubles to 40. Though salaries remained constant, purchasing power dwindled, especially on imported goods, for which the plummeting value of the ruble manifested itself in the cost of imports. There's no market explanation as to why the price of domestic foodstuffs should have risen from 20 percent to 60 percent, other than local opportunism.
Lena's cousin called from the Siberian city of Sverdlovsk, saying that shops there were empty from people unloading their rubles and hoarding for the winter. Moscow was comparatively calm, soothed by the insistence of a finance minister that there would at least be food staples available and affordable through Russia's most daunting winter in a decade. But by September 5, as an autumn chill descended on the city, those words appeared to be yet another in a stream of lies by public officials; meat was noticeably hard to find in shops. Meanwhile, the governor of the traditionally impoverished gold-mining republic of Yakutia announced that, for the first time in this century, its gold would remain in the republic rather than being sent to Moscow - an alarming indication of how the nation's center is no longer holding.
If there is any single perception, however tenuous, that glues a society together, it is that of fair play in a country's policies and laws. In Russia, that perception is awfully hard to find.
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Despite all the talk of "privatization," Russia still has only one telephone company, which charges customers $6 even for a failed attempt to call the United States when the circuits are jammed. (There is no utilities commission to monitor and approve rate hikes or business practices.) This is a country with no federal insurance for banks, which have been run by a core of freewheeling magnates, accurately called "oligarchs," who have routinely stolen their depositors' life savings and who, in most Russians' opinion, bear the blame for the nation's current woes.
Like America in the '20s, capitalist Russia has almost no labor movement or employee protections. I spoke with people there who have worked months in succession, up to 12 hours per day, without any days off, only to be paid weeks late. One woman, employed by an American company, told me her repeated requests for an unpaid vacation have been denied through three years of employment. And there is no agency, private or public, to which she can appeal.
The poorest citizens, living in rural villages miles from the capital, barter with goods rather than currency. (The International Monetary Fund's insistence that Russia collect its taxes is rendered somewhat absurd when wages are paid in pickled fish.) Meanwhile, the oligarchs, transferring millions of dollars from former state budgets and IMF funds into personal accounts in the West, simply refuse to pay their taxes. It's hard to believe that the IMF has been ignorant of this reality, and its tacit participation in the charade, by continuing to funnel more millions of dollars to known embezzlers, indicts the IMF in the crisis as much as it does the Russian leadership.
Nobody I spoke with believed that President Yeltsin had become anything but a national embarrassment - a crusty, bewildered alcoholic - or that Viktor S. Chernomyrdin (the former prime minister and ex-head of Russia's natural-gas utility, whose return to power Yeltsin was trying to orchestrate) would do a single thing to help the economy. In fact, people generally regarded him as a "fat cat" in the service of the oligarchs. (According to a European newswire report, Chernomyrdin personally profited by about $5 billion during his tenure in Russia's post-Soviet government, while it was announced last week that the entire Russian economy had only $13 billion in reserves.)
Russians' cynicism about their leaders is now so entrenched, most people say they'll support anyone, thief or not, who can stop the ruble's plunge into oblivion and let them get on with their lives. The very words capitalism and democracy have now replaced communism as synonyms for chicanery. Yeltsin's aura has so faded, the Communists (now the majority party in the Duma, the Russian parliament's lower house) can reasonably speculate that the Democrats have earned sufficient public contempt to allow the Communists to roar back into power.
The day before I returned to L.A., Lena and I stood in line together for an hour and a half to get into the one store in Moscow still selling knitting yarn at the "old" prices. The image of women waiting patiently in a queue extending a quarter-mile around the basement shop, and of increasingly barren shelves across the city, recalls the days before the fall of the Soviet Union. Meanwhile, the Communist leader, Gennadit Zyuganov, vowed to continue blocking Yeltsin's nomination of Chernomyrdin for prime minister, though the Communists had still to come up with a candidate of their own. As Lena's father put it, "The house is on fire, and the owner scratches his head, pondering the best way to fix a pipe under the sink."
Lena works as an executive for a Moscow-based fashion-boutique chain - a Russian-American joint venture owned and administered by an American living in Europe. Her paychecks are direct-deposited into two Most-Bank accounts. In one (a checking account), the majority of her salary is automatically transferred in rubles, which she can withdraw with checks or with an ATM card in any number of machines across the city; the second account (for savings) contains the remainder of her salary, which she has converted into dollars - also available for withdrawal via the same ATM card.
After hearing reports of an impending financial debacle, she was anxious to retrieve her previous month's salary, already a week and a half overdue. We went together to the Hotel Ismailovo, her local pit stop for an ATM machine owned and operated by an institution somewhat ironically named Income-Bank.
The first sign of trouble was the machine's refusal to honor her card. "Your bank no longer authorizes access to your account at this machine," came a message in Russian through the glass. The network had been severed; each of Russia's dozens of banks was now on its own.
Which meant we had to board the Metro for a ride downtown to Most-Bank's central office on the Arbat. She stopped at Most-Bank's ATM machine, which dutifully spat out the larger proportion of her salary in rubles, but denied her access to the few thousand dollars in her savings account that she'd been building over several months as a start on the cost of her daughter's college education.
When she tried to deal with the problem inside the bank proper, the militsia was guarding the door from an anxious throng. These police did let people in, but only at a trickle, to protect the tellers from irate customers. Dollars were no longer available - anywhere in Moscow. In a Soviet-style move, Russia's Central Bank had abruptly stopped selling the U.S. currency to all of the nation's banks and had halted trading on the Moscow currency exchange, which determines exchange rates. These moves had three effects: creating a banking logjam, freezing depositors' savings accounts, and also freezing the ruble at approximately eight to the dollar, at least through the weekend. Over that same weekend, as banks crashed and merged, Lena, like hundreds of thousands of Russians, saw her savings disappear into thin air.
Russians also spoke about American/European employers who, having determined their employees' salaries in U.S. dollars (which were then converted into rubles), speculated on the crisis by suddenly determining their salary payments in rubles. This meant that, as the ruble dove that week, these employers saved 30 percent to 40 percent in salary payments. Though salaries may have remained constant in rubles, the week's hyperinflation rendered these workers (as it did Lena) up to 50 percent poorer.
I spent an evening alone with Lena's father, a former composer and jazz-band leader now paralyzed from the waist down and confined to a cot in a tiny bedroom. He spends most of his time either reading newspapers and novels or watching a portable TV, living on a pension of 480 rubles a month (the value of which is shriveling by the minute). He offered me an annotated review of Russian politics, from about 1990. His furious discourse was punctuated with the words vori and svolochi - liberally translated as "thieves" and "motherfuckers." On the day I left, he offered me a box of chocolates - "a gift," he said, "from the Russian people to the American people . . . Open it." I did, and saw just a plastic shell and empty wrappers. "You don't want it?" he joked. "All right, so go hungry."
Russia has come full cycle. Stalin shut down collective farms, trying to pull the country from an agrarian to an industrial economy. Today, apprehensive Muscovites check to see if the soil in their back yards will support vegetable gardens to see them through next year. Yeltsin has presided over the complete dismantling of Russia's industrial/commercial age. As the new century dawns on the Baltic states, Russia is as paternalistic and feudal as she was during the Middle Ages. (Moscow's mayor, Yuri M. Luzhkov, is one of the most effective and popular politicians in recent memory; still, he wants no power larger than that over his own fiefdom.) What gives most people the jitters is Russia's still-massive armaments, combined with the sense that nobody's actually in control. Two goldfish in a bowl, goes a joke making the rounds in Moscow. One fish says to the other, "There is no God." The other replies, "Then who's changing the water?" The answer to that one remains a mystery.
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