I write to you today and for the coming month to six weeks from St Petersburg, Russia. During this stay, I will broaden my reporting from the events and media coverage of the war in Ukraine that have been my staple since 24 February to more mundane but highly relevant issues of how everyday life in Russia is going on notwithstanding the distortions caused by the West’s sanctions.
In today’s installment, I direct attention to how I got here and what I learned along the way, to the peculiarities of the present ruble-euro and ruble-dollar exchange rates and to the bread and butter issues of how the Russian food stores and markets are currently operating, meaning price inflation, changed country-suppliers and the like.
The Covid 19 pandemic created serious barriers to travel globally, including travel from most anywhere to Russia, where issuance of visas to tourists and business visitors was suspended for 18 months starting in the late spring of 2020. And when the Russian borders re-opened tentatively to foreigners in the late summer of 2021, that did not progress very far before the onset of Russia’s ‘special military operation’ in Ukraine beginning in February of this year prompted the mutual closing of airspace and cancellation of air travel between Russia and all of Europe.
For these reasons, my intended periodic visit to St Petersburg where my wife and I maintain a pied à terre, was postponed several times as we investigated exotic travel solutions after our March tickets on Finnair were cancelled by the carrier. On the advice of friends, we decided to access Russia via neighboring Estonia.
The Estonian capital is just 368 km by road from Petersburg, and much of the route in both countries is good to very good four-lane highways. The problematic part was always the border crossing. From the Russian side, the town of Ivan Gorod, you go through their passport and customs control building and then proceed over a bridge in your car, bus or on foot, crossing the Narva river to the Estonian border control in the town which shares its name with the river. There another full document check takes place, though you remain in your vehicle while frontier police take your documents for inspection in their offices.
The situation at the borders today is greatly complicated by the large flows of Ukrainian refugees on the move into Estonia that began about three weeks ago when the Russian forces besieging and attacking Mariupol completed their victory over the Azov battalion and other radical Ukrainian nationalists. The Ukrainian forces had held the city in their grip and used the civilian population numbering nearly half a million at the start of hostilities as “human shields,” or hostages in plain English. When the power of the nationalists was broken by Russian forces, humanitarian corridors heading east into Russia were opened. More than 120,000 refugees from the city and its environs were given free choice of where to head after liberation. Some, like those we encountered at the Estonian border, decided that their safest option would be to head north through Russia to the EU Member States of Estonia and Finland. The alternative, heading west across Ukraine, simply was deemed to be risky. This became all the more true once the Russians began bombing railway power stations a week ago, crippling the train service across Ukraine.
Be that as it may, the Ukrainian refugee crisis caught up with us Friday night on our bus trip. An sms message from the bus operator an hour before scheduled departure time warned us that our bus was delayed and that we would be informed later when it would show up in Tallinn. A chat with the staff of Ecolines at their offices just near the station clarified that problem: our bus was still waiting for clearance at the Estonian-Russian border. Meanwhile, back at the bus station we chatted with several Russian-speaking ladies who were there waiting to meet incoming Ukrainians on that very bus now delayed. They were there to receive a party of four Ukrainian refugees from the Mariupol area. From their experience, the current delays at the border can add three to eight hours to the normal bus trip of seven hours. At the borders, each of the Ukrainian refugees leaving Russia and entering Estonia has to be interviewed to record their case, their intentions. Many are lacking proper identification papers, so their processing simply takes time.
How long this crisis will last, no one can say. But it makes the land route between Scandinavia and Russia a miserable choice.
We were lucky that our bus to Petersburg was only half filled and that among the twenty or so passengers there were only three Ukrainian refugees. They were traveling back to Russia, to the total confusion of the Estonian border police. Their story was that they had been living in the Mariupol region, where they had a farm and livestock. After eight years under the Kiev regime, they had their fill of insecurity and moved across into Russia to travel north to Scandinavia. For reasons unknown, they were denied refugee status in Estonia and now had to return to Russia, from where they probably would try another refugee route into the EU. Their return into Russia raised more eyebrows there. The Russian border police took them off our bus for longer debriefing and that was the last we saw of them.
Tallinn is a charming small city of 450,000 with a touristy medieval center. It is also a town where everyone in the hospitality industry and a majority of the folks enjoying the sights are Russian speakers. Most of them are in fact citizens of Estonia.
To be sure, Estonian in the only official language, but the authorities have some common sense and don’t overdo their protection of national identity: signs in the streets urging people to register for Covid vaccinations carry Russian and English texts as well as Estonian.
Everyone identifies Petersburg with its historic imperial period city center, but that is not what you see when you arrive by bus. The city has a population ten times bigger than Tallinn. Its extensive new industrial-logistical parks and high-rise residential districts on the outskirts are strikingly modern, and you sense at once the pulse of a big lively city that operates 24/4. One hundred per cent of the folks strolling the streets are Russian speakers. These days, foreign visitors are a very rare breed.
Yesterday morning I began enjoying the full spectrum of Russian media which I had been denied in Brussels after the West lowered its Iron Curtain of censorship following the onset of the Ukraine war. Conversely, some Western channels have been cut here in tit-for-tat measures. For example, www.news.google.ru, to which I referred readers in a recent essay, is not accessible on my computer in Petersburg, surely as a result of the ongoing Google-Russia fight. However, my staple news sources Financial Times and The New York Times are fully accessible. I still have to look into which of the global television news providers have been removed from Russian cable and satellite television and will report on that later.
I began my day listening to the radio station Business FM – Moscow over breakfast. The station offers a potpourri of news with an emphasis on economic and business issues. What caught my attention was a brief feature report on movements in the ruble-dollar and ruble-euro exchange rates.
Several weeks ago I remarked on the decision of the Bank of Russia to relax constraints on currency exchange that were imposed after the start of military action and the immediate collapse of the ruble which for several days was trading at 120 rubles to the euro. The new rules would allow Russian citizens to freely transfer hard currency to accounts abroad within certain monthly limits. They also allowed banks to sell cash, euro and dollar banknotes, to their clientele.
I wondered at the time where these banknotes would come from given that there was no longer any flow of tourists and business people carrying cash into the country. I speculated that perhaps some customers of Russian hydrocarbons in the West were quietly shipping banknotes by the plane-load to Moscow to cover current deliveries of gas and oil. A few days later, I saw reports that in fact the banks had no banknotes to sell their clients. However, at the time there was no follow-up in Russian news and I let go of the issue.
Now, the Business FM report was more detailed. Indeed, their journalist contacted several banks and was told that they had no currency to offer their depositors. The radio station went one step further and checked to see what the actual exchange rate of the dollar and euro to the ruble might be “on the street” and how it might differ from the officially quoted rate of the Central Bank. What they found is that the exchange rate for purchase of dollar and euro bank notes is just a few rubles more than the official rate. In other words, there is no true “black market” currency exchange. This discovery raises as many questions as it answers.
It may well be that the non-cash exchange rate of the Central Bank is an accurate measure of the strength or weakness of the ruble since it reflects mainly commercial demand of big business. In the past couple of weeks, the ruble has strengthened significantly against foreign currencies. Its present value as quoted by the Central Bank is 5-10 percent higher than before the Ukrainian crisis. The ten percent change with respect to the euro is partly explained by the collapse this past week of the euro rate to the dollar in the West. But the broader explanation is that Russian exports continue at high levels while imports from the euro and dollar zones have plummeted.
With foreign travel for Russians to Europe now so very restricted for reasons of problematic visa issuance by the foreign consulates in Russia presently operating with greatly reduced staff, and for reasons of the very limited travel options to get to Europe, it may well be that private demand for physical cash has dried up.
I round out this discussion of the exchange rate with my personal experience yesterday at the Sberbank branch in the Petersburg district of Pushkin. I exchanged 400 euros and received rubles at the rate of 71.49 to the euro, which is considerably worse than the Central Bank’s cross rate on the 30th of 74.56 rubles to the euro. No sooner was the transaction complete than the cashier called over to colleagues: “I’ve got some currency!” Obviously, I made their day.
Finally, I direct your attention to an area of reporting that I pioneered back in 2014 following the first wave of European and American sanctions: my walking tour of food product retailing in St Petersburg. Yesterday I pursued my customary visits to retailing at three levels: what they call here “economy class” supermarket chains (in my neighborhood, a chain called “Verny”), an upmarket supermarket chain (Perekryostok), and the city market where vendors specialized in one or another food product occupy stalls or small stores (Pushkin market).
My sweeping generalization about all three categories of retailing is that they are all well stocked. The Russian consumer is spoiled for choice, as I intend to demonstrate. Price is a different matter, and I will make a first attempt at gauging inflation, nothing more than a finger to the wind, but hopefully informative, especially to those readers who only know about the Russian consumer and his/her options from highly prejudicial Western media.
I begin with the “economy class” Verny supermarket that is just across the street from our apartment complex. This is where I buy most basic foodstuffs, and even wines, given that they have exceptionally smart buyers and sell at very fair prices. This is the store where the value oriented and restricted budget military families who are a sub-group of our residential district do most of their shopping.
My inspection began with wines and I can report that the Spanish and Italian wines remain strongly represented and at prices unchanged from where they were on my last visit in late October. I imagine that the warehouses of this chain and their importers have goods on hand to last several months more. These products will eventually be replaced by an enlarged assortment of Chilean, Argentinian, South African and other wines from friendly countries. Moreover, ever more shelf space will be allocated to the growing numbers of quality wines from the South of Russia and Crimea. These Russian products are today very well packaged in high quality bottles and sometimes also have good quality liquid inside.
The same stock conditions are true of detergents and other dry goods supplied by major Western consumer goods manufacturers that recently declared they are leaving Russia. A better test of how Russia is faring under conditions of severe sanctions and embargos is fresh produce, meats and poultry, fish and the like.
The economy class supermarket still offers the meats and poultry it had before the crisis. These were then as now almost 100% Russia-sourced. In the past year or two before the crisis, Russian producers of marbleized beefsteaks and high quality cuts of pork in special atmosphere plastic packaging had done a very good job bringing these products to all levels of retailing. Locally grown poultry was long before at a fully Western level in terms of packaging, long storage and other parameters. The prices yesterday were not noticeably different from what I paid in the past.
As regard fresh produce, nothing much has changed. Lettuce, small cucumbers, green onions, tomatoes have for several years now been grown in hothouses located regionally and the supply, as well as the prices remain excellent. Russia’s advantages in gas supply, which is essential to hothouse farming, translate into stable prices even now for these vegetables, whereas in Belgium for example, cherry tomatoes recently doubled in price thanks to the rise in energy costs.
As for fruits, a very large portion of non-seasonal items was always imported. The sanctions have had not had much of an impact on assortment. Bananas were imported from Ecuador and the fruit on display in Verny still come from there. But some other fruits are obviously coming from new supplier countries. The kiwis are now smaller, but better than ever. Apples, conference pears (a typical export item of Belgium before 2014) and similar non-exotic fruits are all present in abundance and at seemingly unchanged prices.
The assortment of dairy products at Verny also is virtually unchanged from before the crisis. These had long been completely Russia-sourced from producers of local brands. How long the Danone yoghurts will bear that logo remains to be seen, but the product will not disappear.
Turning to the upper middle class Perekryostok supermarket in my neighborhood, I will speak about two product categories which drew me there in the past as well: fresh fish and the manned deli department.
The fish counter remains very attractive. The perfectly fresh sea bass and dorade royale were and remain supplied by Turkey. They are not cheap at about 8 euros per kilogram, but that is nonetheless half the price you pay in Belgium and freshness like what I paid for yesterday is not assured even in upmarket Belgian supermarkets or at specialty fish mongers. The usual Murmansk supplied lake trout and flounder are still fully available. What is missing at Perekryostok now is fresh salmon. From after 2014, when Norwegian imports were banned, the Faroe Islands (Denmark) became Russia’s main source of this farmed fish. Now they too apparently are no longer invited onto the Russian market.
The deli department at Perekryostok is totally unchanged from before the crisis. All the delicacies so beloved of Russians, in particular, Salade Olivier and other prepared appetizers are available at seemingly unchanged prices.
My remarks on “unchanged prices” will clearly need greater attention as I spend more time in stores. I am obliged to admit that my total purchases in the two aforementioned supermarkets yesterday totaled perhaps 15% more than I spent in the past, but it is difficult to compare based on just two shopping carts full. Some food products are priced comparably to Western European prices, as was true in the past. Some others remain well below Western prices. That is true of wines and spirits. Premium quality Russian vodka costs less than half what the product costs in Belgium, where excise taxes are very high.
It remains for me to say a few words about the Pushkin city market, which occupies a special place in retailing. As was always the case in the distant Soviet past, such markets offer luxury products that are well beyond the pocketbook of most citizens. However, in fairness, ordinary Russians always were and are ready to spend a higher percentage of their disposable income on food and especially on exotic and pricy items for family celebrations. So it is not only plutocrats who frequent the market stalls.
What I found at the market yesterday reconfirms the high level of the products on offer. What has changed is the countries of origin. That said, Turkey remains a big player. There were wonderful fresh strawberries from there yesterday, though competing strawberries also came from Russia’s Krasnodar and from, most remarkably, from Greece, which officially should not be represented here. I might add that strawberries of this quality simply are unavailable in most of Western Europe, which is held in the clutches of a Spanish mafia, who peddle their chemicals laden berries that bring only woe to anyone with an allergic susceptibility. Happily Belgium is an exception to this rule during the early spring when Flemish farms put superior local strawberries on sale in the supermarkets.
One fruit counter in the Pushkin market offered wonderfully scented honeydew melons from South America and perfectly ripe watermelons from Iran. Other counters featured large and very attractive cultivated blueberries from Morocco. I can only imagine that these products are arriving air freight, as surely did the fish from Turkey, to assure the evident level of freshness.
A visit to one of the fish stores within the market grounds turned up an unexpected discovery: farmed salmon supplied from Murmansk. I imagine that the supply from there is still too small to enable them to meet the requirements of the supermarket chains. This shop also offered the Petersburg seasonal specialty of koryushka, a sardine sized lake fish which traditionally is caught in the Neva River that passes through the city as the fish leave their home in Lake Ladoga after the ice breaks and head for the Gulf of Finland to spawn.
Koryushka has a distinctive aroma of fresh cucumber. Every self-respecting Petersburg family will buy it from stores, from vendors who for a week or two sell it on the city streets. Rolled in flour, fried in sunflower oil, it graces the table and brings joy even in these trying times.
©Gilbert Doctorow, 2022