The El Dorado factor: diary notes from a visit to St Petersburg and Moscow, July-August 1992
Dancing on air. That’s my mood after spending 10 days in St Petersburg and Moscow at company expense taking my ‘vacation’ leisure, prospecting for further real estate investments and – doing a hell of a job to put UPS operations in Russia back on their feet.
When Larisa first planned last winter to make a long stay in Russia, including a couple of weeks of my vacation time, I had balked. Then in June, when her father revealed himself hopelessly unable to secure a dacha or even an apartment in a seaside resort for us, I threw in the towel and we cancelled flight tickets that would have taken us to St Petersburg July 1st. Instead we spent a couple of weeks in our unrented Knokke apartment on the Belgian coast and I schemed to rent something cheap for Alexa and Larisa in either the Italian countryside or at Lake Bled in Slovenia. Nothing ‘cheap’ surfaced and in the meantime Larisa’s determination to take Alexa back to her homeland came to the fore – so I agreed to ship them off to St Petersburg for 5 weeks. By clever planning I managed also to schedule a 10 day trip to StP /Moscow for myself on UPS business – right in the middle of their sojourn.
Never try to judge what is going on in some remote place like Russia by sitting in your armchair and reading the papers, even so authoritative a paper as The Financial Times. My feelings about Russia were negative, pessimistic before the trip. Partly this was due to the ongoing unpleasant conflict with our JV management and with partners Sovtransavto, who have pointed us in the direction of bankruptcy and/or a divorce in the JV marriage. Partly it was due to the confusing and steady stream of negative news coming out of the CIS, both economic and political. The dangerous ethnic conflicts there seem ever ready to overwhelm the ongoing economic reforms in resurgence of Communist leadership under the guise of nationalism, as in the Balkans.
What surprised and greatly encouraged me was to see the progress in carrying out the bold economic reforms. Specifically, the achievement of ‘internal convertibility’ of the ruble, and the ongoing privatization of the housing stock. The former means that Western goods are being sold in normal ‘Soviet’ shops for rubles as well as in the sidewalk kiosks that line the main thoroughfares and by the street peddlers along the highways. Western bananas are being sold on the street for less than locally grown apples per kg. Nescafe is sold in the store shelves competitively with Russian soluble coffee. French cosmetics have bumped Bulgarian ones. Colgate is sold on the street for 35R a tube ($0.20). Coke Lite cans are competing from little stands against Pepsi kiosks.
Prices have risen in food shops to the point where they are well stocked and there are no lines. Cheeses, canned Soviet salmon, dairy products – all things which had disappeared from open sale 10 years ago – now are openly available, if you can find the money. Prices are below world levels, but still are shocking to a country where the pensions and minimum salary are set at 1450 rubles/month = $9.50 To locals, like Larisa’s relative Valya, the good in this change is not apparent. Why, she opines, can’t they leave some cheap shops for us poor people, alongside the well-stocked shops with luxury goods that the wealthy want?
How can you persuade such people that this shock therapy is for their own good, that such differentiated pricing is impossible and would stand in the way of real reform. Without closing factories, without firing people, the new prices give all capable people cause to run from their moribund state enterprises and seek employment in the newly opening private sector.
Now at the same time we meet with the déclassé– our Moscow friend Tolya Silin, whose connections once got him into state sanitoria and the best hotels for free, who once had the fortune of 20,000 rubles in bank accounts and now has the buying power of less than 10% that amount. So is the reform really just pauperization? No, because at the same time the privatization of lodgings gives everyone the chance to enjoy real equity. Privatized apartments in Moscow now sell for $1,000/sq meter. In St P they are $400 – 500 per square meter. This means that the owner of a 60 sq.m. flat in Moscow has the possibility at any moment to get the equivalent of $60k and move out – emigrate, as he wishes. What they lost in paper money they can more than make up in real estate.
And on that subject, Larisa and I are caught up in our old fever just days after my calculation of our debts had left me swearing on all things sacred that our buying of real estate must be curtailed – and we must save cash.
I visit some flats in Moscow. They can be very attractive – and the rentals are phenomenal, $3,000 – $5,000 per month for 120 sq.m. But the renovation work is massive – stripping the walls to the brick. And the money to put up, at $1,000 sq.m. is already considerable – with no possibility of mortgage. One hell of a risk.
In StP, Larisa and I together visit some flats. First in the $18 – $22k range. Unacceptable! 5th floor walk-ups! Entrances that are ill-lit, malodorous, utterly inappropriate to our purpose of renting to foreigners. We even see a $40k flat that had been advertised as ‘without defects’ – but is in reality the typical Soviet wreck, with no view. The lady owner is inexperienced, tricky; has deceived more than one buyer into thinking she is ready to do a deal, while meanwhile angling for more money.
The problem is that the mafia is in the real estate market – ready to snap up almost any property to be used to launder their ‘hot’ money. So you are competing against their dollars; and they are seemingly ready and able to transfer funds abroad, as the emigrating sellers require. Nonetheless Larisa is hopeful – identifies and attractive 120 sqm apartment on the top floor (with lift) of a decent building directly on the Moika. She will visit this next week. Also several possible one-bedroom apartments to visit later.
Larisa’s ambition of showing our daughter her St Petersburg is realized and successful. Alexa is enthralled. She spent a week ‘on her own’ with Valya, coping in Russian. Comprehension really seems to have developed and she dares to speak, even if grammatically unschooled. The kid is wide-eyed, observant and enthusiastic. Now she has real estate fever too and hopes we will buy in StP. We take her on Sunday of my departure to brunch at the Hotel d’Europe and she really and truly flips out. The fine food, the mood set by the Dixieland band, the wonderfully restored Art Nouveau dining room – all cast a spell. She so proudly shows me the jar of wild raspberries and blueberries she collected during her week in the forest; it’s her first round of berry hunting; her first swimming in forest lakes – in the wild. The kid has a keen sense of the exotic position she/we are in and she loves it. No longer blasé, she is genuinely enthusiastic, elated, radiant, as my photos of her and video interview in our hotel room show.
The trip is varied, exciting for both Larisa and me. We travel together without the kid for all but the last two days. This means the overnight train trip down and back to Moscow. For the first time in my life I actually sleep soundly and sufficiently on a train. Then a couple of nights together at the Hotel Radisson Slavyanskaya – this gives us the opportunity to have a dinner with Tolya Silin, Lena, Vlada Kumpman and her husband – Larisa’s old friends; also an evening at the opera seeing a wonderfully staged production of Tchaikovsky’s Queen of Spades at the Stanislavsky Musical Theater.
In StP itself we spend a couple of nights at our old haunt, the Hotel Astoria, in a room overlooking St Isaac’s. One night at dinner in the hotel, another we go to see the production of Swan Lake put on by Tanya’s ex-husband, Bruskin – Larisa’s old friends at the Theater of the Hermitage. This last is beautiful, with newly restored stage curtain showing the double-headed eagle. All that’s missing is the tsar’s family.
On the last two nights in StP, following our return from Moscow, there is great variety. Friday evening I rent a Nissan Sunny and we drive out to Repino on the Gulf of Finland, where the Cinematographers’ Club ‘Dom Tvorchestva’ has reserved a room for us at the ridiculous price of $3 per person with full board. Then Saturday we indulge in the other extreme, a $315 room at the Hotel d’Europe that Larisa absolutely loves.
The Hermitage ballet has its own vignette truth of the new Russian reality. The tickets are sold via Intourist at $40 each. The house seats 200 and nearly every place is taken, implying a gross receipt of $8,000. Out of this the dance troupe is given 10,000 rubles = $60 by Intourist, a shocking abuse of privilege. The troupe is private – Bruskin’s own. He has an impresario in France and a tour is scheduled for October – November. The problem is to survive till then – for which he needs $10,000. I offer to help find a patron – will approach the Credit Lyonnais office in town.
Everyone has got a story he is longing to share. Everyone wants to vent his optimism on the reforms, on the state of the economy. You scratch anyone and they bubble up with information.
Weather is largely cooperative. Mostly sunny but not too hot. The days are still so impressively long in StP – still more than at home, longer than in Moscow.
The feeling is that most anything is for sale. On Nevsky, grannies seated on stoops sell bric-a-bac, most likely their treasured possessions. Nearby kids sell Wrigley’s chewing gum or Coke or Colgate. It’s a new world of petty retail activity. On the highways every so often there are outdoor grills with tables. A couple of years ago you’d get 20 years for the trouble.
Alexa is impressed that our hotel television has Superchannel and MTV and CNN. Yet she spots a need for radio to appeal to adolescents.
To my surprise, the Gold Rush atmosphere here is contagious and I am thinking it might not be a bad idea to move to Russia for 6 months – buy an apartment, participate more directly in the fantastic changes now beginning. Even Larisa agrees. Now if I want to be truly energetic, I’ll start chasing the oil companies, who are establishing multi-billion dollar deals.
This is the first time I travel to Russia with our video camera. And I remain a bit cautious, or perhaps lazy. There is such a wild combination of old and new, historic change in the air. The crust of Soviet neglect is being scraped away – literally. Bronze plaques announcing the unpronounceable abbreviations which served as the names for Soviet legal and commercial entities are removed. Paint which had covered the bright, gilded mosaics on the edifice of turn of the century, Art Nouveau corporate buildings (banks, insurance companies)is removed, revealing the pre-Soviet past for admiration.
Western cars are appearing on the streets. Purchases of second hand cars have sucked W. Europe dry. Add to that those stolen cars. The Japanese right-hand drive vehicles sold for a couple of hundred bucks in Vladivostok are all cruising down the StP and Moscow thoroughfares, lending a more familiar look to the streets as they crowd out the bizarre Chaikas, Moskviches and Volgas.
Not everything changes. As they say about the StP Intourist group, it’s the same old gang of thieves even if the titles and positions of desks have changed. Management at the Intourist-owned Astoria remains uneven, unsympathetic. At the Swedish run Hotel d’Europe, I am told that the Swedish manager and his team of German assistants are going through staff daily and applying hire and fire procedures till they get staff who work and know how to smile. The results are evident – the Hotel d’Europe looks and feels like a Western hotel. There is at least a modicum of professionalism. Compare this to the Astoria, where the front desk staff and service desk staff are ignorant and uninterested in helping guests.
©Gilbert Doctorow, 2020
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