Russia: Where Progress Gives Way to Hondas and Swiss Chocolates

March 20, 1994|By SCOTT SHANE

MOSCOW — Moscow. -- February on Zubovsky Boulevard: a treacherous sidewalk packed with fur-hatted legions, grimly marching through the fourth month of winter; diesel-blackened snow plowed into a moonscape at the curb; 10 rumbling lanes of traffic jam, wheezing trucks looming menacingly over tiny Zhiguli sedans.

To a visitor who has been away for 29 months, since just before the red flag came down over the Kremlin, the first glance is as familiar as Lenin's stone-carved face. But the second glance reveals breathtaking change.

Weaving among the Zhigulis are Mercedes, Toyotas and BMWs, lots of them, with Russian tags and sometimes with telephones. On the sidewalk, vendors offer bananas from Ecuador, tomatoes from the Canary Islands, mandarin oranges from Morocco -- and there are no lines.

At the old Progress bookstore, only one-fourth of the building remains for books. Half of the ground floor has been taken over by a Honda showroom, its wares defiantly shiny through immaculate plate glass. Upstairs is a fancy supermarket, complete with laser checkout to read the bar codes on the Swiss chocolates and American instant coffee. At the entrance is a currency exchange booth, where a handsome young woman is ready to exchange rubles for dollars or dollars for rubles, with a smile.

Where am I? In 1991, in many of this capital's food stores, cases labelled "Meat" and "Dairy" were empty except for artfully arranged packets of Turkish tea, rumored to be radioactive. On a winter sidewalk the appearance of a basket of wormy cabbages or half-rotten potatoes drew a crowd. Trading rubles for dollars outside the state bank could earn an unlucky citizen eight years in a labor camp.

Whisked from that time to this, an average Muscovite might at first conclude that reform had at last worked miracles, making all his wishes for abundance come true. But the proverbial wisdom is right: Be careful what you wish for. You just might get it.

The smile on the face of our time-traveling Muscovite would twist into bewilderment at the magnetic sign announcing the day's market rate for a dollar, pegged by the state bank for many years at below one ruble.

"Buy at 1,675 rubles. Sell at 1,720 rubles," the sign says.

When he asked the fruit vendors their prices, the Muscovite would learn that a single grocery bag of such delicacies could cost 50,000 rubles, a pensioner's monthly income.

Finally, when he stepped into the nearby Gorky Park Metro station to buy a token, his discomfiture might turn to incredulity. The fare, stable for decades at five kopecks, or one-twentieth of a ruble, is now 50 rubles, or 1,000 times more.

The tokens now are plastic, since the value of a metal token might exceed the fare.


The two reliable institutions of the Soviet economy -- the shortage and the queue -- were vanquished within months of President Boris N. Yeltsin's decree of January 1992, freeing state-controlled prices on nearly everything.

In a week's prowl around Moscow, the only line I saw was outside Chara Bank, one of scores of banks that have sprung up to compete for the public's money. Depositors were waiting to pick up their quarterly interest payments, paid out at an annual rate of 300 percent on ruble accounts, 60 -- sixty -- percent on dollar accounts.

If queues are history, so are shortages. Only one shortage remains, one well-known to denizens of all market economies: the shortage of money in a person's pockets. If you have the cash, you can buy anything you want, whether it's fresh strawberries, a CD player for your Volvo or a Kalashnikov submachine gun.

Economists used to call the long lines symptoms of "repressed inflation," a consequence of prices held artificially low. Now inflation has been liberated.

Our friends Boris and Masha, whose family of six insisted on giving up one of their three rooms to us for our stay, bought a white Zhiguli in 1989 for 8,000 rubles, the savings of many years. A year ago they bought their 3-year-old son, Gleb, a toy riding car -- for 8,000 rubles. Today the toy car costs 44,000 rubles.

To orient me in the new economy, Boris' father offered a formula many elderly people use. "It's easy," he said. "Fifty thousand rubles is 50 rubles. You just take off the zeros."

History has played a cruel trick on the Russians, dangling goods that for decades were the stuff of fantasy right before their eyes -- and beyond their economic grasp. Prices are close to American prices -- housing is the only item still cheap for most people -- yet even in Moscow, the average wage is about $50 a week. Pensioners without adult children to help them out struggle to get by on bread and potatoes.

Yet working people who before stole hours each day from their jobs to wait in line for sausage or to scour the city for batteries now take second jobs and third jobs to earn money. That cannot be bad for long-term economic progress.

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