Russians get the impact of free market all at once

'WHO INVADED US AND MADE UP THESE PRICES?'

January 02, 1992|By Joseph Albright | Joseph Albright,Cox News Service

MOSCOW -- Aeroflot more than tripled its airline fares yesterday, and Moscow supermarket workers were ordered to work late into the evening to triple and quadruple the prices on food shelves before the stores open today.

Ordinary people waited like patients in a dentist's chair with no painkiller. Today will bring them the heaviest jolt of Russian President Boris N. Yeltsin's historic experiment of extracting communism and replacing it with a profit-driven economy.

"Who invaded us and made up these prices?" demanded Vladimir Galitsin, 49, a laborer on his holiday from Moscow's biggest meat factory.

Mr. Galitsin spent New Year's afternoon vainly trying to buy a loaf of white bread but learned that panic buying had already cleaned out the state-run bread store in the Politarsky neighborhood where he lives.

His neighbor, Varvara Bebzova, a 78-year-old widow, settled for a loaf of brown bread -- a staple whose price is due to triple from 60 kopecks to 1.80 rubles today.

The new bread price will translate into only two pennies at the tourist exchange rate. Yet that stiff an increase was enough to persuade Mrs. Bebzova to try to swear off all shopping for the next few weeks, at least until she gets a promised increase in her 107-ruble-a-month pension.

"I have several sacks of potatoes resting on my balcony and some cabbages behind my door," she said.

"I think I can survive on that for about three months."

Though most price rises begin taking effect today, consumers will have to wait until about Jan. 10 to get their first installment of the Russian government's promised doubling or triping of minimum pay, pensions, student grants and army salaries.

Mr. Galitsin spoke in amazement of seeing a box of spaghetti for 15 rubles in a private shop around the corner -- compared to the accustomed price of 1 ruble in the state stores.

He ventured that once Mr. Yeltsin freed prices, it wouldn't be long before spaghetti cost 15 rubles everywhere.

And from the skimpy details the Yeltsin government has announced so far, no one could prove Mr. Galitsin wrong.

All that official television said last night was that price ceilings would go up "from three to four times" today on such essential commodities as meat, baby food, bread, butter, salt, matches, sugar, gasoline, vodka and cooking oil.

Everything else -- presumably including spaghetti -- can rise as much as people are willing to pay.

Mr. Yeltsin's price package, which also includes wholesale land reforms and sales of government property, doesn't officially kick in until today, but at the downtown office of Aeroflot, reservations clerks were already charging new higher tariffs by midafternoon yesterday.

Aeroflot supervisor Svetlana Urtchenko said that the price of a Moscow-to-St. Petersburg ticket rose from 43 to 129 rubles -- up threefold overnight.

For flights outside the Russian republic, she said, the increase is steeper. A ticket to Kiev, capital of newly independent Ukraine, costs 248 rubles -- 5.5 times the old price of 45 rubles. The fare to Alma-Ata, the capital of Kazakhstan, jumped from 98 rubles to 392 rubles -- up four times.

That was a foretaste of the scale of other price increases that will start spreading today among the 290 million people in Russia, Ukraine, Kazakhstan and most of the other former Soviet republics.

At the city terminal of Aeroflot, which has grounded 40 percent of its planes because it lacks money to buy fuel and parts, the higher fares drew few complaints.

"My feeling," Ms. Urtchenko said, "is that our people have stopped reacting to anything."

One place where there will not be an immediate price increase is the three-story McDonald's restaurant in downtown Moscow, where lines of up to 1,000 people waited outside on a clear, 10-degree afternoon to buy a Big Mac for 28 rubles.

"The prices will be the same tomorrow," Lena Vasilyeva, 27, the duty manager, told a reporter. "How long, we don't know. We are totally dependent on our suppliers."

Even some who could afford higher prices expressed rage at the prospect.

In part it was because Mr. Yeltsin, a self-described democrat, is imposing the decision with minimal explanation and even less democratic participation.

At a Moscow bread store, 46-year-old Alexander Andreyev, a math teacher in a scientific research institute, predicted "all sorts of social unrest soon."

"On Aug. 19 I was outside the White House [the Russian parliament building] blocking for Yeltsin," he said. "Now I am strongly against the people around Yeltsin. The empire is destroyed. We are well on our way to the total destruction of Russia as well."

At the state-run grocery store across the street -- whose 150-yard-long food case was 99 percent empty -- the manager said he was keeping his staff late yesterday to mark up prices by "three to four times" by this morning.

He said his chief bookkeeper was meeting at a Moscow municipal building with an official of the city's trade council who would give the store its final price list.

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