Some say street vendors are ruinous, but entrepreneurs see a way to profit


December 13, 1992|By Kathy Lally | Kathy Lally,Moscow Bureau

MOSCOW -- In an odd way, the angry and complicate debate consuming the opening days of Russia's Congress last week could be understood most clearly by considering the humble kiosks crowding Moscow's sidewalks.

Russians look at the kiosks, which sell everything from liquor and fur coats to shampoo and underwear, and see either certain economic ruin or guaranteed salvation.

The bustling kiosks, where prices are set by the seller and not the state, are an inescapable reminder that Russia has turned its back on a command economy and is trying mightily to adapt to a free market.

Over the last year, after President Boris N. Yeltsin issued a decree permitting free trade, their numbers have exploded. Moscow officials say there are now 15,000 kiosks in the city, with the majority put up this year.

"The kiosks are a mark of a colonial country," said an angry Vladimir Pavlov, a member both of Congress and of an outlawed opposition party. "We can't rejoice that such things have appeared."

On the other hand, the kiosks represent an enormous improvement in standard of living for Gennady Pikanov, 39, a former factory worker who now runs eight kiosks. "We used to be completely poor," he said. "Only now are we making any money."

A huge chasm has developed between people like Mr. Pavlov, who is dependent on the government payroll and thus has an allegiance to the past, and people like Mr. Pikanov, who have thrown themselves into the developing world of business and invest heavily in the future.

Mr. Pavlov has joined the anti-Yeltsin forces calling for slower change, with close government regulation of business. Mr. Pikanov is impatient that change has not been fast and free enough.

These opposing views of the past, present and future define much of the debate embroiling the nation, whether over constitutional amendments or the performance of Yegor T. Gaidar, the acting prime minister. They separate the pessimists and the optimists.

Mr. Pavlov and like-minded people are convinced that Mr. Gaidar's reforms have been a colossal failure, that life has only gotten worse.

Mr. Pikanov and other entrepreneurs want faster legislation and the creation of new structures -- like a banking system. They believe it will take more than a year to begin repairing the %J damage done by 75 years of communism.

Against this uncertain landscape stand the kiosks, which began to take over the streets in earnest during the summer.

Though kiosks -- small metal or wooden stands -- had been around for some time, they sold only ice cream or beverages or newspapers or theater tickets. But as perestroika took hold and ice cream began to disappear, some began selling small items like soap or candy.

Then, over the summer, they took off. The new kiosks sell nearly everything except fresh meat and vegetables. They offer boots, rugs, beer, wine, cigarettes, tennis shoes, fur coats, hats, shoelaces, seductive bras, cans of Diet Coke or Pepsi and a little bit of everything else.

For Russians, the prices are astronomically high. But people are buying. It's not the most efficient way of shopping -- it's hard to try anything on in the middle of the street, and a kiosk that sells tennis shoes might only have four pair, all the same size. Even so, the contrast to a year ago when little was available is startling.

All this buying and selling takes place on the street because the title to most stores is unclear or because stores are occupied by moribund state enterprises.

In the last few months, the city, unwilling to lose out on the action, has insisted that the haphazard sheds built out of odd building materials be replaced with city-built and city-leased kiosks.

Birth of a business

Mr. Pikanov's wife, Ina, was the one who propelled the couple into the new economy. In 1988, as perestroika was taking hold, she was an aide in a day-care center. An acquaintance was making American-style baseball caps and invited her to join him.

Every weekend and every evening after work -- Mr. Pikanov was a technician at an electronics factory -- the Pikanovs would go to work making baseball caps.

"For two years we worked like that," Mrs. Pikanov said. They made enough to buy a used Volga -- the Pontiac of Soviet cars. Eventually, the man who had started the business moved on to something more lucrative and Mr. and Mrs. Pikanov took it over. They did that for another year.

"Then the prices of materials started to go up," Mrs. Pikanov said, "and we realized it would not be a very profitable business."

It was the summer of 1991, and the kiosk business was beginning to gestate -- some "commercial" shops were permitted.

Mr. Pikanov said he decided to take the risk and went to work selling in a kiosk. One month later, the August coup occurred. Mr. Pikanov thought he was finished.

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