Russians take ruble crisis in stride at the market Many spending money before it loses value

August 21, 1998|By Kathy Lally | Kathy Lally,SUN FOREIGN STAFF

MOSCOW -- Let prime ministers and presidents, and even the Central Bank, promise whatever they like. Let the smart money flee the stock market. Let the financial experts foretell doom. The average Russian hardly cares anymore.

Russians know how to survive, so in the uncertain days since Monday, when they were told the ruble could lose up to a third of its value this year, they have been spending whatever money possible.

Early in the week, the better-off were snapping up washing machines and refrigerators, trying to get what they could out of the ruble before prices rose. Yesterday, the less-well-off were investing in mayonnaise, rice, pasta, sugar, salt, kasha -- even trips to the dentist.

Anna Vasilyeva, 75 and delicate, carefully negotiated the jostle and bustle of Moscow's Vyatsky Market yesterday, dodging trucks backing up on the main walkway and dollies loaded 6 feet high with cheese, yogurt, soup, spaghetti and listing cases of beer.

The market, which started business a few years ago with scrappy entrepreneurs selling nonperishable food, drinks and cigarettes out of the backs of trucks or huge shipping containers, has gradually built walls around the containers and recently even acquired a roof.

Prices are lower than in the stores -- the roof is the only frill -- so Vasilyeva came to Vyatsky to fill her cheap duffel bag with five cans of condensed milk and six cans of fish. She had her own bottles for sunflower oil sold directly from small tanks.

Retired after years of working for a shoemaker, she had just received her monthly pension of 420 rubles. Last week, 420 rubles was worth about $68. Yesterday, she wasn't sure what it was worth -- perhaps $54. And next week? Who knows?

"This situation could make you cry," she said, "if you thought about it."

Russia's financial crisis reached one of its periodic cataclysms this week, and many panicky Russians began withdrawing bank deposits to spend the money quickly, threatening a precarious banking system even further. Banks are generally regarded with suspicion, because many Russians have already lost their savings once or twice to monetary pronouncements from on high.

Rubles to dollars

Thoughtful people turn their rubles into dollars and hide them under the mattress -- and not only in Moscow. In Novosibirsk, a Siberian city of more than 1 million, residents bought $21 million in U.S. currency in April, May and June, according to Irina Yasina, a spokesman for the Central Bank.

The chairman of the Central Bank, Sergei Dubinin, announced a plan yesterday to insure deposits through the state-controlled Sperbank.

"We are calling on the population of Russia to go calmly through this difficult period in the financial crisis," Dubinin said. "We are calling on Russian depositors not to rush to transfer their deposits or to take out their deposits."

Sofia Kharmalova, 77, met such assurances cynically, vowing she would keep nothing more than a little money for her funeral.

"Before reforms, I had some savings," she said, "but you know what happened to that."

Kharmalova, a retired writer for a medical journal, said she spends so little on food now -- less than $10 a week -- that she can't stock up. She hasn't eaten any meat for a few years, she said, and mostly lives on kasha, the national porridge made from buckwheat.

Eating less

"I spend only 50 or 60 rubles a week," she said, "so it doesn't matter. It means I'll have to eat less."

The country, she said, has been stripped to the bone by its leaders. She was particularly incensed, she said, when she heard that former Prime Minister Viktor L. Chernomyrdin had interrupted his vacation to return home and cluck over the economy.

"He was on the Cote d'Azur," she said. "It makes me sick. The leaders take all the money and put it in their pockets."

In the West, many analysts have been predicting that any drop in the value of the ruble would result in widespread social unrest. Last week, the ruble stood at 6.2 to the dollar. This week it has been reported as low as nine or 10 at some exchange points. Yesterday, many exchanges were offering 6.8 if you wanted to turn your dollars into rubles but 7.8 if you wanted to trade your rubles for dollars.

There have been grumbles, but no real protests.

"You know, we've seen so much hardship, we don't react to anything anymore," said Yulia Berezena, 64, a librarian. "Maybe there are people out there with some initiative, but I haven't met any."

In addition to saying it would allow the ruble to drop as low as 9.5 to the dollar this year, the government temporarily stopped payment on treasury bills, which will provide the state about $36 billion over the next 18 months, Prime Minister Sergei V. Kiriyenko said yesterday.

He plans to use the money to help pay back wages, which grew by 6.5 percent in July, to $11 billion.

"If we were to continue servicing our debt and making payments on treasury bills," Kiriyenko said in a television broadcast, "we would be unable to pay wages and pensions."

Yuri Ryzhov, 65, and his wife, Lilya, 63, said they didn't understand what Kiriyenko was talking about, but they knew there was trouble ahead. They bought some food yesterday but decided to hold back their last rubles for something they could sink their teeth into.

"We're going to the dentist," Lilya said. "You're nothing without your health."

Pub Date: 8/21/98

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.