19 December 2014

Russia in crisis

. . . a look back at September 1998

According to a joke circulating in Russia [in the "default" year 1998], two bankers are conversing:

“How did you sleep last night?”
“Like a baby…”
“How could that be??!!”
“Every hour I woke up and cried!”
(Interfaks-AiF, September 18, 1998)

December 2014: We have been following this week's financial developments in Russia attentively. The implications for ourselves and our friends and colleagues in Russia make this story very personal. For this blog post, I dug out the report I wrote on my visit to Elektrostal, Moscow, and Volgograd in September 1998, the month following the famous "default." Here are some excerpts, edited for the sake of privacy for some people and groups mentioned in the original report.

Translator Mira Perper in her study.
Elektrostal, September 1998: this truck was selling potatoes
for 2 rubles a kilogram.
The relentlessly cynical Exile's cover for September 24, 1998,
featured an ATM telling the customer, "Sorry, all your money
is in Switzerland." 
Current humor. (Source.)
Survey: "How much will dollars cost in the new year"? The
online version of the business newspaper Kommersant began
running this survey yesterday. Choices from top to bottom:
64 kopecks; 36.6 rubles; 100 rubles; from three to five; money
isn't everything.
See source for most recent tally. Note: 36.6
rubles was normal about two months ago; today the figure is
about 60.
When I arrived here in Elektrostal, Russia, two weeks ago ... I knew I was coming to a country in economic crisis, whose financial structures seemed to be dissolving and whose government seemed powerless to act. The US news media had been emphasizing the worst, with dramatic scenes of lines at currency exchanges and warnings of the global consequences of Russia’s economic instability. Some members of the Board of Friends House Moscow, whose meeting was one of my reasons for being here, seemed ready to postpone the meeting entirely. What would happen if hyperinflation took over? Would a military adventurist fill the power vacuum? Would the borders be closed?

Six weeks ago, when the crisis began (provoked by announcements and hints from the Russian government concerning devaluation of the ruble and rescheduling of loan repayments), the Russian media were just as apocalyptic. By the time I arrived on September 18, the newspapers had become more philosophical, often reflecting (and fueling?) the cynical attitudes of the public with their own gallows humor. The weekly Argumenti i Fakti published an article with the front page headline, “How the Bankers Stole our Money.” The following week they asked, “Is it Worth Putting Our Money in the Savings Bank?”

The biweekly Interfaks-AiF ran a headline, “We Wait for a Change,” followed by the subtitle, “If the crisis is all in our heads, it’s not necessary to beat us about the head so hard.” In the same issue, a commentator, Vladimir Razuvaev, remarked on “Our Funny Politics”: “Politics in Russia seems funny by its very nature. The head of the state promises to lie down on the train tracks if prices in the country rise, and at the same time gathers neoliberal [market-oriented] economists under his banner. He makes his experienced and devoted prime minister resign, only to call him back to this same post five months later. On Friday he announces that the ruble will not be devalued, but the opposite is happening by Monday.”

Two issues later, a front page article is suggesting that if duty in the new prime minister’s cabinet is so unattractive to Russia’s politicians, maybe Primakov ought to consider some new sources for cabinet appointments: “Look, Russia’s great friend Helmut Kohl has just been released. The German electorate, who benefited from his sixteen years of chancellorship, have decided to change their country’s top person. As a result, the most experienced politician in the world today is sitting around without any of the sorts of responsibilities appropriate to his stature….” Remarking that “… it is not in our Russian nature to do things by halves,” author Anton Trishin goes on to add former prime ministers of Japan and Great Britain to his list of potential recruits, and then points out that, according to rumors, even such figures as International Monetary Fund head Michael Camdessus and our “friend Bill” Clinton might soon be available for cabinet positions!

In the meantime, you can turn to the newspaper Segodnya (September 28) for an article on “How to Transfer your Money Across the Border” – presumably to a safe place outside of Russia. Why would you want to do that? Because, as author Olga Zaslavskaya bluntly says, “Money which falls into a [Russian] bank literally disappears into a black hole.”

Serious analytical articles abound as well, including proposals from a panel of state-control-oriented economists from the Russian Academy of Sciences, leaks from within the government’s own discussion (one leak concerned possible restrictions on dollars, leading to a brief panic yesterday), and thoughtful essays and interviews with the views of such leaders as the head of the center-left Yabloko party, the head of the Central Bank, and former prime minister Viktor Chernomyrdin.

Several commentators focus on the country’s lack of a pervasive national identity and sense of purpose as a systemic source of governmental paralysis. Commentator Nikolai Petrakov writes in Interfaks-AiF about the economic consequence, namely that the country’s financial sector is completely disconnected from reality, and the government is doing nothing about it. The banks have become financial organizations generating money out of thin air through their financial manipulations instead of actually investing in the country’s productive capacity. It is as if “our government regards the people as a biomass on which they can perform experiments.”

In an odd sort of way, maybe prime minister Primakov is confirming this suspicion, at least for the time being, by saying (as quoted by the newsweekly Itogi), “The country may be able to, so to speak, maintain self-restraint for some amount of time.” Newspapers and television stations are speculating on what will happen on October 7, the date appointed by a major association of trade unions for a general strike. Will people use the opportunity to say on a massive scale that they’ve had enough?

In an article in Nezavisimaya Gazeta, September 26, Duma member Vyacheslav Zvolinksky also addresses the systemic roots of the crisis in Russia, and warns of the possibility of civil war. He believes that the state, particularly the Duma, must take responsibility for its role in saving the country, but feels that the state has been paralysed because of the contradictions and imbalances contained in the constitution. He urgently calls for constitutional reform before food and energy supplies are depleted to the point where the people lose patience entirely and rise up in elemental protest, “sweeping away everything in their path: the new government, the president, and all the legislators lost in their doubts and discussions.”

At this point, people so far are indeed showing remarkable self-restraint. While the politicians dither and the financial puppeteers pull their strings in Moscow, the people of Russia show their characteristic patience, resignation, persistence and incredible decency and somehow keep the country going. What else can they do? So, as I put down the newspapers and look around at real life here, my first impressions are that life on the streets of Moscow, Elektrostal and Volgograd seems amazingly normal. The only unusual activity is that life’s daily rounds of shopping, school, childcare and (often unpaid) work now also include frequent trips to the currency exchanges, as people draw on their hoards of dollars to pay for food and other necessities whose prices had often doubled or tripled since mid-August. (Of course, not everyone has little stashes of dollars, but many did collect at least a few for a rainy day.) Here in Elektrostal, plain bread, potatoes, milk, vodka, bus fares, apartment rents and utilities remain at roughly the same prices for now, but just about everything else has gone up. Cheese has gone up 50% to 100%, meat has doubled or tripled, rice has gone up as much as five times. Many imported products, especially manufactured goods, are now priced in a currency euphemistically labeled “conditional units” (“UE’s”) which are really dollars, even though payment must be made in rubles.

New tasks lead to new hassles: Often people find that the currency exchanges close early for lack of rubles. Here in Elektrostal, it took me six visits over four days to two different places (and one private “banker” operating out of his car) to collect enough rubles to pay for my round trip Moscow-Volgograd train ticket. That hassle was a concrete, if minor, way I could share the daily reality of millions of Russians. Even when they can get rubles, people want to get the best price for their dollars, so they compare rates between different exchanges, and try somehow to slalom their way through the frequent changes. Just before I arrived, rates were as high as 22 rubles to the dollar, but today they are 14 to the dollar (making people very cynical about the fact that they can get rubles today but not when they were at 22!) and last week the dollar ranged between 15 and 11.5 within just a few days. As one person said, “There’s just no way to beat it; the people pulling the strings will always come out on top in the end.”

Underneath all this apparent normalcy (the usual activities of working, commuting, buying and selling, gardening to the very last moment permitted by weather, and so on) there is a quiet desperation which is only dealt with by concentrating on one day at a time. “I can’t even imagine how we will get through the winter, so I just think about today,” said one of my Elektrostal friends.

Another friend, in Volgograd, described how her elderly parents are coping: “They are spending the money they set aside for their burial. I go to the store for them, so I see how their money is getting used up. They try to buy things for me, too, but I tell them I have everything I need.” In saying that, she is simply lying; she can only count on some bread and one meal each weekday at the school where she teaches. Ordinarily she has to pay for her meals at the school canteen, but the director is allowing them to eat on credit until they are paid their salaries again. Not that the long-postponed salaries are much to wait for; hers is about $100 a month in newly deflated rubles. [The new rubles, with three zeros lopped off, were introduced the previous year.]

For their other needs, the teachers often pool their money together and divide up the shopping tasks – each person buys one or another thing in bulk for the whole group. Together they try to scrounge up food and supplies for the children as well. The same is going on at the home for children with special needs here in Elektrostal (headed by one of the participants in the Friends group) – the food budget allocations from the government have long since disappeared, so the staff must beg and improvise to keep the kids fed.

Twice I went to my host family’s dacha to help with their garden, a heavily planted half-acre or so. The little house on the plot burned down last year, but the main point of the place is not to relax, but to provide food, so the dacha’s winter-lifeline function continues. We carried back big bags of beetroots, carrots, tomatoes, lettuce, cauliflower, and turnips – and armfuls of gladiolas! In our case, the gladiolas are for gifts and for decorating the home, but I found out that for many, the importance of growing flowers is that they can be sold on the street. I saw several elderly women selling flowers on the street in Moscow; somehow they have to carry these huge, beautiful blooms in on the suburban trains and get to their destinations without crushing them, stand and call out to potential customers all day or until they run out, then go home and cook and get ready for the next day of survival. (They might be able to get a better flow of customers by bringing their wares to an outdoor market, but then they might also have to pay a cut to the Mafia.) On Thursday it snowed in Moscow and Elektrostal: the garden season is coming to an end, whether everything has been harvested or not….

The current issue of the Economist reports the results of a survey of Russians:

“Are you being paid at your place of work” Answers: Yes, regularly: 18%. Yes, irregularly: 25%. (Most of the Russians I know are in this category.) No: 57%.

“What will enable you to live through the economic crisis?” Food from own small-holding or dacha plot: 44%. Stockpiled food from the summer: 12%. Game-shooting, fishing, picking berries, mushrooms, etc.: 12%. Food bought at cheap outdoor markets: 10%. Informal self-employment 10%. Help from relatives in the countryside: 9%. Bank savings 5%.

Interesting, but not surprising to me, are the answers to another question: “Would you like to emigrate if the situation got worse?” Yes: 18%. No: 62%. Hard to say: 20%.

Compared to these widespread hardships, it seems anticlimactic to report on my own activities during these past two weeks. I spent most of the first week helping with English classes in two schools, Natasha Fedorchenko’s Foreign Language School (Natasha is a participant in the Friends group) and Sergei and Larisa Kazantsevs’ New Humanities Institute. The Elektrostal Friends group met once while I was there, probably their only meeting since Retha McCutchen and I visited in March. I also had visitors from Moscow.... I attended a meeting of the group working on joint publication of a Russian edition of the book Lighting Candles in the Dark, a Friends General Conference collection of stories of nonviolence in daily life, primarily illustrated with art by young Russian and American artists. I made two visits to a remarkable 81-year-old scholar, Mira Perper, whose parents were Tolstoyans and who herself has translated books and articles by [and for] Bill Edgerton, a retired professor of Russian history and literature and member of Bloomington Meeting in Indiana. Finally, a young member of the Elektrostal Friends group, Dmitri ... and I made a brief trip to Volgograd by train to visit with a teacher there who is a friend of Richmond residents Paul and Marie Turner.

... In case I leave the impression that there is nothing but misery and introspection in Russia, I should point out that people haven’t forgotten how to have fun. Elektrostal has just celebrated the 60th anniversary of its founding as a new Soviet city with festivals and carnivals and cultural programs. There is still a carnival going on at the hockey stadium, with rides and booths of all kinds, and plenty of loud music. Teenagers and young adults are still pairing off and flirting in public, on the streets, in the trains and metros and buses, creating little bubbles of privacy around themselves to make up for the lack of privacy at home.

President Clinton’s woes have been a source of diversion: every English class I have visited has had at least one student who wanted to know what I thought about the affair. Attitudes in Russia are almost 100% pro-Clinton. One laborer came up to me at the New Humanities Institute and, realizing that I was American but not realizing that I spoke Russian, said with a big grin, “Clinton – good! Kennedy – good!” Excerpts from Clinton’s grand jury testimony were shown on Russian television on the very day I arrived. A week later, a headline in one of the “boulevard papers” (Russian versions of National Inquirer-style tabloids) read, “Americans Tired of Lewinsky.” After reporting on Monica Lewinsky’s literary agent’s failure to get a book contract for her, the article went on to say, “We, however, publish our newspaper not in America but here, and so we promise that our next issue will have more spicy details from [independent counsel Ken] Starr’s office.”

Russia is still Russia, and signs of the Soviet era still remain here and there. During my visit to Volgograd earlier this week, Dmitri and I stayed at the Soviet-style Intourist hotel, run with the old “we know what is good for you” style. Sometimes the results of that attitude can actually be better than expected. When we registered at the hotel, we received breakfast vouchers. But when we asked about when we might be able to have dinner, we heard the familiar reply, “Sorry, but the restaurant is being renovated.” I asked, “How will we have breakfast then?” and was assured that though the kitchen was closed, there would be some cold items available in the morning.

The next morning, wondering what we would actually find, we sat down in the ornate and nearly empty dining room and awaited our cold items. There was no menu, we would get what we would get. And we did! -- apple juice, coffee and tea, a delicious cheese and egg dish, rolls, bread, butter and excellent Russian jam, cheese, and a huge bowl of hot cereal. Later we went to two museums in Volgograd – the museum of the battle of Stalingrad, and a museum devoted to the city’s civil war history and the Russian emigration to France. In both cases, Dmitri asked, “May I take photographs,” and in both cases, the response was “No, it is not allowed, but … oh, go ahead!” At the civil war museum, the staffer looked around and added, “But please make it quick!” The managing editor at Astreya, Svetlana Bazovkina, which is publishing the Russian edition of the Quaker book Lighting Candles in the Dark, presented us with some proposed cover art for the book which was a throwback to the socialist-optimism style of twenty years ago … but she did understand our doubts about that style. She herself is an editor for, among other things, the new magazine, Igromania (“Games-Mania”), a magazine for fans of Nintendo, Sega, and PC games.

After these two intense weeks, I’m leaving Russia with a lot of mixed feelings. This is not an easy time for the Russian people, and something in me feels a bit embarrassed to be “escaping” to the somewhat more stable West. I especially regret not being present on October 7 for the general strike. It helps to remember that my Volgograd friend, the one who was pretending to her parents that everything was okay, ended her visit to me with these words: “The most important thing is that I know Jesus Christ is with me.”  [Moscow-based Eastern Orthodox Christian and Quaker] Tatiana Pavlova said almost exactly the same words to me. In prayer and in the unity of faith, I hope we can be with them and the millions of others in Russia who are in the same situation. And may the same faith bear fruit in political life: as evidenced by the lively, creative debates in the press, the Russian people are fully capable of coming up with the policies needed for their country, but forming and applying the necessary political willpower seems to me to be a supernatural task.

[Sadly, Mira Perper died in 2001, Tatiana Pavlova in 2002, and Bill Edgerton in 2005. Eternal memory to all of them! To what extent these travel notes are still relevant to 2014, I leave to others to decide. Certainly there are many differences between 1998 and now, but the mood of uncertainty, a certain degree of resignation, and the importance of humor remain constant, along with the imperative of prayer.]

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