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Anecdotal account of the 1993 Moscow Study Trip

Copyright 1993 by Eric Fenster

Aeroflot's flight from Brussels started almost as usual. If the new carpeting--attached flat to the floor at least in most places instead of bunching up to trip the unwary--was a surprise, the baggage piled in front of the emergency exits but unnoticed by the cabin crew was not. My first request to a flight attendant got him to move the baggage... and to jam it behind the hinges so as to defeat any attempt to open the door. Finally I moved it myself under seats in business class--to the smiling approval of all the flight attendants, who were taking advantage of that empty cabin to flirt with each other before takeoff.

After more than a year, the meal tray at my favorite seat still tilted at a dangerous angle and meant another meal eaten with one hand while using the other to keep everything from sliding onto the floor. When lunch was served, only a flicker in his expression showed that the attendant realized he was committing the tray to the forces of gravity, but would he make a report?

The flight ended with another of the Aeroflot pilots' feather landings.

The trip in May 1993 was 17 months into "shock therapy," and in many ways turned out to show that everything, and nothing, had changed had changed. An early example: On the second night in Moscow, we went to the Obratsov Puppet Theater. It was almost exactly a year after the founder's death at 91. In July 1991, Obratsov had been honored on his 90th birthday. A poster montage of photos tracing his life was hung on a wall in the theater and, next to it, a framed letter of congratulations from President Gorbachev. Both were there last October; this May the letter was gone. I asked a woman attendant why. Time passed ("proshol vremya"), she answered. Any display only stays up for a certain time and then its usefulness is ended. I looked at her: "It was a political decision, wasn't it?" "Yes," she acknowledged, quietly. Gorbachev is rejected today, so history is dealt with by being erased. Again.

We visited a publishing house of children's literature, and those in our group familiar with printing technology were impressed by the quality. The enterprise was still state-owned, and the director felt reasonably confident: After food, the first thing a Russian family thinks of buying is books for its children, he said. In the West we imagine Russia to be hungry, but we don't always know in what way. It was reassuring. Book prices were low, partly because the publisher wanted them to be so that the books would be accessible, partly because margins over 50% kicked in an excess profits tax. The publishing house earned its real money, hard currency, via a contract with McDonalds to make apple pie cartons.

The problem was that speculators bought up the books from the bookstores and resold them on the street for several times their true price. Here, as in other sectors, state retail stores were converted into wholesale distributors, doing neither the producer nor the consumer any good, but pushing inflation up. (The state store employees surely received payoffs to sell their goods in bulk. Whether any portion of these bribes found their way back to producers, I don't know.)

In May the average monthly wage of the 207 workers was 15,000 rubles, about $19 at an exchange rate that was varying rapidly, with the highest paid worker at about 33,000 rubles. When we came back in June, the average salary had jumped to 28,000 rubles, about $27 at the current exchange rate, and there had been another 23% of inflation (officially!).

May 9, Victory Day. After the events on May 1, when police blocked demonstrators from marching and clashes broke out, our host felt obliged to officially warn us against going to Gorky Park; it was unknown whether "unapproved" demonstrations would take place there and whether there would be violence if they were attempted.

Our host was covering his bases. That I understood, but he also believed that trouble was likely, and that I did not. That is, I did not understand how his assessment of the political opposition could be so far off. The sacrifices and history in World War 2 (the "Great Patriotic War") were almost sacred. For either the nationalist-patriotic or the communist oppositions to deliberately disturb the commemoration in Gorky Park by bringing violence to the midst of aged war veterans and their families would thoroughly discredit them and their cause.

If there were to be violence, it would be because the authorities refused to grant a parade permit for a march from Belorussia Station. It was ironic that Yeltsin was now applying the same restrictions on demonstrations that had been used against his followers in Spring 1991: The freedom to demonstrate depended upon "permission" from authorities, who could refuse on flimsy grounds. The same authorities could decide how many demonstrators would be allowed, which was to say that they would determine the existence and the extent of any grievance against their own authority.

At the last minute, the authorities avoided confrontation by backing down from their denial and allowing all marches on May 9.

In the Park, my group managed to talk with a number of veterans, but the most memorable was woman who was a doctor and whose campaign medals showed she had moved from one difficult front to another during the war. She married a soldier in 1952 and returned to her home in the Urals which she hadn't seen for 9 years. Her husband died in 1954, of his war wounds she said, before they had children. She never remarried, and continued to practice medicine all her life.

We came upon one of the many typical knots of people gathered around a few musicians. One veteran had an artificial leg and walked awkwardly with a crutch, but every time the music started he'd hand his crutch to somebody to hold and manage to dance with grace and pleasure.

Our visit to an agricultural machinery factory was, in itself, almost the story of today's Russia. The original building dated from 1902 and was put up by an American firm. At its peak, the plant made mowing machines, 26 per day, and employed nearly 9,000 people.

In May, production was down to two per day. The machine was too expensive for the collective farms, too big for private farms, fuel price increases made it too costly to run--and, anyway, it was almost impossible to get the engines because they were made in what had become another country.

When I came back with another group in June, production was one per day and scheduled to stop in July. Components were already piled up around the assembly line, which wasn't functioning.

To survive, the factory was producing a new, small mower, designed to be horse drawn to solve the problem of fuel costs.

We toured the plant, trying to avoid the puddles, slippery floors and debris. Any film maker who wanted to depict a worker's hell would have pronounced the foundry a perfect set. In the press room, five workers were just finishing lunch next to their 1902 drop press. It was still working perfectly well, but to what purpose? I watched the process. Four 80 cm metal stakes at a time were hand-held under the press, a diamond-shaped bar was suspended over them and the press bent the stakes into a 20-degree angle.

Another huge building was filled with a line of modern heavy presses, but there was no work for them to do. Both times, in May and June, the production director who was escorting us stopped talking and stared at this contemporary albatross: still there each time he looked, still useless.

The director impressed us because he seemed to know all his workers. On several occasions, he pointed out bent, withered old men. "He's 45." "That one's 42." Workers could retire at 55 but, according to the director, they usually didn't live that long.

The workers, eager to talk, were angry and without hope. Those in the press room, where the bad conditions mean receiving a premium, claimed in June that they earned 15,000 rubles/month, about $14. Later we were told that in June the average wage was 15,000 and the range was 7,000-60,000 rubles, the low end for white collar employees. In June, the government estimated the "physiological survival" income at 13,000 rubles!

The enterprise was selling off its social property in order to meet the payroll. This included a stadium, a house of culture, a kindergarten and housing. Since sport, cultural and pre-school facilities were usually linked to enterprises under the Soviet system, this meant a major loss to the workers and to their families.

The factory was privatizing, and it voted to use the "second variant" by which the workers buy 51% of the shares and became the "owners." In this case, that meant 66,000 shares at 1,800 rubles. But 1,800 rubles was a lot for the wages being earned, and the workers hadn't bought all the shares. The "solution," according to the editor of the factory newspaper, was that many shares were bought by a "worker" who had also established four businesses on plant property. "He's not at all intelligent." she said.

What she meant was that he'd got himself on the payroll so as to legally be a worker entitled to buy shares, but that he was really fronting for racket interests. The racketeers had colossal sums at their disposal, and at the current rate of exchange the whole 51% of the shares would cost only about $240,000 with all thebuildings, machinery (some modern), land use, etc.

According to the editor, not just this relatively small factory but the major successful ones (e.g., automobile with new automated assembly lines) were being bought up in this way by the mafia in a mockery of "privatization." Under the privatization law, the new "worker" owners could sell their shares in just three years.

With privatization, the agricultural machinery plant's workforce was expected to drop to about 2,300.

We visited a dairy farm whose owner, Peter Illyitch (as in Tchaikovsky) began it as a private venture more than five years earlier, as soon as land leasing became possible. He had experience in animal husbandry, and would need all his knowledge in that field. State farms would only sell their worst cows, and he was still breeding them back to quality.

The finances made your head spin. Peter had taken out several loans and bought equipment as fast as he could to keep ahead of inflation; the grounds were strewn with machinery that still had no use. The interest rate kept rising, but when we were there in May, Peter showed us a tractor which he bought for 600,000 rubles in 1992 year on an 8% loan but which had become worth 18 million. Since his total indebtedness then was 15 million, if he had gone bankrupt he could have sold the tractor, paid his debts and been 3 million ahead! By now, interest on the most recent loan was 80%, but with inflation at 2000% in the last year, that meant a highly negative interest rate.

The farm was in a region near Moscow known for its clean air and forests, a coveted place for a dacha. And near the farm ostentatious 3-story brick dachas were under construction. Under a new law, Russian citizens could own 0.15 hectare plots of land, but local authorities decided on how the land was distributed. Here, the prospective owners convinced the authorities by agreeing to bring gas and telephone lines in exchange for the land assignments. As the village mayor told us, he preferred to give the land to the rich. Put this together with other reports that country houses near Moscow were selling for $100,000-250,000 (in a country with a $30 average monthly wage, remember), and it is clear that corrupt officials and racketeers were the beneficiaries. In fact, despite the continuing severe housing shortage, there was a virtual building boom of luxury dachas observable around Moscow.

"We lack suburbs with individual houses," a young Russian businessman explained to me. I reminded him of the traffic jams which now clog Moscow and talked about Los Angeles. Imagine Moscow's suburbanization, starting with a core population of nine million, to say nothing of the destruction of the surrounding forests and country which have been preserved until now.

In May we went to St. Petersburg, where robbery of foreigners was practiced officially and unofficially. Last year, I remember one museum that tried charging foreigners triple admission. This year the rate for foreigners was 70-100 times the price for Russians. If that wasn't enough, we visited the Hermitage and St. Isaac's on International Museum Day, when entry to all the world's museums was free. That didn't stop both museums from charging admission as usual. Only when one was inside was a small sign visible announcing the free admission.

At a street kiosk, a Russian woman with our group bought a pastry for 50 rubles. A minute later, her American companion tried to buy one and was told it was 500 rubles. When he said he knew the correct price via his friend, the kiosk owner came out and began beating up our Russian woman. For "betrayal," I suppose.

On arrival back in Moscow, one person each in three of the five train compartments we occupied discovered he had been robbed. We went to the railway police to file a complaint. They were not surprised by the robbery, because "it happens everyday," but that we bothered to report it. "I believe we were gassed," I said. The police said I was probably right. "The French had this problem, but they finally made the effort and caught the gang," I said. The French were here to advise us, the police replied.

A few people decided to go to the Bolshoi on their own and went with a Russian friend to buy tickets at the theater. The Russian verified the price, came to tell the group, then hustled them away. When they were a sufficient distance, he explained that a scalper had overheard the woman at the ticket office quote the proper price. While the group was being informed of it, the scalper warned the woman that if she sold the tickets at that price, she would be "hurt." "Why are you doing this to me?" she pleaded. "I have a daughter to feed." It was to keep her out of danger that the Russian stopped the purchase and took the group away from the scene.

In May, we met a woman who, despite many difficulties, had launched a successful publishing company whose proceeds helped her run a foundation to support education and culture without external (ie, government) interference.

In June, we visited the commercial side of her activity, which involved not only publishing but other branches, including real estate. When I asked about the real estate, the reply concerned a major research and business center south of Moscow's center which had gotten off to a shaky start because of "bad publicity."

I was shocked. "So you're the ones!" I blurted. And they were. The story was that some time after Moscow's mayor decided he had absolute control over the city's land and buildings, he ceded 700 acres on Lenin Prospect from October Square to Gagarin Square to an organization that planned a major "development" program. We're talking about some of the most valuable urban real estate in the world, and it was disposed of in this way without any public hearings or discussion.

The French were involved, so the French ambassador came to the ground breaking ceremony in 1992. Yeltsin was also expected. A big hole had already been dug, but when the officials arrived they found the hole filled by demonstrators who believed they would be losing their apartments and who had not even been consulted. Yeltsin got wind of the demonstration and stayed home. When the French ambassador realized what was happening, he scolded the organizers and left the ceremony. In October 1992, I brought a group to Moscow to offer a seminar on business methods. One person, who was in public relations, made contact with a Russian group that was a potential client for him, and a Russian friend of mine went along to translate his negotiations. A short way into the conversation, she discovered she was talking to the group involved in the "development" project, which needed a PR person to save its image problem. The irony was that she lived in (and had been born in) one of the apartments thought to be menaced, so she suddenly seemed to be helping to negotiate her own homelessness!

Anyway, there we were in the bowels of this organization. In response to my questions, they claimed that nobody would lose housing, and that all the fears raised about this were just a "communist plot." Then they said they had had a survey of the district done that showed that 43% of the area was "garbage" land!! (Anybody reading this who knows Moscow will have his jaw around his knees by now.)

When tongues wag in Moscow, they claim that absolutely every government official and every transaction is corrupt. I'd like to think that isn't true, but I do know that raw materials were a major Russian export, and I do know that a Russian friend who worked for a Western company that bought such raw materials was told to have his company representatives bring $300,000 in cash on their next trip and that it would be collected right at the airport in exchange for the signatures approving the export.

What one saw of so-called business were street kiosks selling alcohol, soft drinks, cigarettes, shampoo. Many products were imported, others were domestic but put in Western packaging to deceive customers. All sorts of "entrepreneurs" were running about starting new businesses, but all involved in import and trade or in tourism and "services." I almost never met anybody who planned to PRODUCE anything. Those who claimed they wanted to said it was impossible. Maybe so, or maybe colossal overnight profits couldn't be resisted.

Also, in a country with abacuses instead of cash registers, no checks or credit cards and an inappropriate accounting system, it was overwhelmingly tempting to engage in businesses with all cash transactions and to hide income from everybody, especially the tax authorities.

Three Americans arrived for a conference on "Socialism Today." The organizer sent an 18 yr-old university student to meet them at the airport and take them around the city. He well-dressed, well-mannered, but when he took them to visit the Kremlin churches, he told them the cost for foreigners was $15 and that if they kept out of sight while he bought them tickets he could probably get them in for the Russian price of $5. The real price, for everybody, was 5 cents! What pushed this young man to cheat foreign guests who were, to boot, his comrades at a conference on socialism?

Contrast. In October I dropped in on a secondary school where I knew French was taught. A teacher invited me to a literature course where 12 yr-olds were following a lecture completely in French. The lecture surveyed several centuries of French and Russian writers, their styles and the influences they had on each other. The children not only followed everything, it was clear they had read many of the authors. Afterwards, the teacher asked me if I was bored. It was the most positive thing I've seen in Moscow, I replied, but how do you explain to these children that their friends are making fortunes on the street but that they should continue their education? "We tell them it's temporary," she answered, lamely.

Another contrast, the efficiency with which all the aspects of our visit were carried out, and the care--whether it wasin the friendliness of the kitchen staff in the tears of the woman guarding our floor when she thought our late return from a trip might have meant we had an accident.

Overall, there were changes since last year. People claimed to be optimistic, often adding that they had no other option. It was true that high prices had replaced rationing and empty shelves as the barrier to access to goods. My friend in St. Petersburg explained the difference succinctly: Last year if one were desperate enough to trade the shirt off one's back to survive, there was still nothing to buy; this year, giving up your shirt would get you something in return. According to him, being able to postpone utter poverty is a tangible increase of security,

What struck me most, however, were the things which remained the same: First, yet again, the acceptance--the seeking even--of a force to play the "leading role" in society. Before, it was the (good) Czar or the Party; now, the entrepreneurs. This faith that, given a free hand, they would magically restore the economy was the fad among the intelligentsia, one of whom assured me that studies proved that only one in ten people were inherently capable of true business initiative. Even trade unionists had taken up the slogan that they must help "create their own exploiters" and then struggle against them.

Put in this context, the tolerance for the outrageous wealth being accumulated by a very few became understandable and resembled the concentration of power rationalized under the previous ideology . The new system was, in this sense, less a break with the past than the legacy of it.

Presumably, at some point the "entrepreneurs" would become satiated with what they had either appropriated or amassed without producing anything, and they would cease sending it abroad or consuming it ostentatiously and really invest in restructuring. This would be the economic equivalent of the Khrushchevian political liberalization, a Russian version of the famous American trickle-down theory.

This attitude was accompanied by a new dose of determinism which condoned all the criminal or negative aspects of change as "inevitable" or "to be expected" and predicted their eventual disappearance. I almost expected to hear that, "you can't make an omelette without breaking an egg," the version of the-end-justifies-the-means which bathed the sins of the previous ideology.

Why Russia's mafia, which was being given a unique opportunity penetrate ubiquitously, should abdicate when organized crime is estimated to be America's third largest industry and has a firm grip Japan and other wealthy countries was not explained.

The second stable idea was the attitude toward workers as lazy drunkards. This was neatly linked with the first, of course; after all, that's why the workers' state needed the Party as a guide. I have an allergy to scapegoating workers for the failures of a system they didn't create and, at some periods in Soviet history, would have been criminally liable for challenging. In fact, throwing one's labor into a workplace which wasn't supplied for production for most of every month would have been insane. Far better to "steal" cement and construct something with it as a side job than leave it harden in the rain. Surviving Soviet absurdities and being lazy are contradictory terms; it took energy and ingenuity to satisfy one's needs.

What people did seem to have engraved in their minds was that an open direct line between two points could only be an illusion. Inordinate non-productive energy was spent fabricating alternatives, and the (il)logic made corruption a completely natural part of the landscape.

The attitude toward workers was paradoxical. Private ownership was touted as the savior which would improve people's work by giving them a direct stake in its outcome. The same people who blew this horn condemned the option for workers to buy their own enterprise on the grounds that if they were the owners they would not take the hard decisions necessary for the enterprise's good, or that if left to elect their own management they will choose only directors who do not demand performance.

What was also forgotten in the euphoria was that in the capitalist countries supposedly being emulated most people work for salaries, not because they have a private property stake in their work. Yes, there are owners, but I daresay the average schoolteacher works with as much dedication as any shop owner, and probably for much less pay. Our societies would collapse if good performance required greed and/or private property as the motivator because we just don't have that many social functions where those are relevant. Even for people who are owners by virtue of investment--stocks, for example--their personal incentive to work and the performance of the companies they "own" are completely unrelated. Success in modern capitalist economies depends largely upon how well the riddle of making bureaucratic management perform wisely is solved.

An alarm also needs to be sounded about the threat to the human infrastructure. Paying educators and scientists sub-starvation wages meant they all had to look for a side "business" and, as often as not, neglect their primary work just when the whole Russian educational system needed revision and attention. A similar pressure was placed on health professionals at a time when a crisis, aggravated by environmental degradation seemed to be striking at the fundamental level of the gene pool itself.

The dichotomy was between an insane policy to privatize much of education and health when the large majority of the population had to spend most of its income for food, while an elite could assure its implantation by sending its children to schools which cost two months' average salary per day!

Students from former Soviet republics enrolled in Russian universities were being told they must pay for previously free education and that $3,000-4,000 would be a bargain because it was so much less than American universities charge. (As expensive as US higher education is, and as unusual as America is among industrial countries in charging for it at all, it is still not ten times the average annual salary per year!) This policy could not only hurt relations with CIS countries, it threatened the human capacity in countries very much part of Russia's economic geography.

Many people have claimed that socialism has been proved not to work by the failures of the Soviet Union's version of it. If present Russian trends continue, fairness and logic may oblige those same people to assert that capitalism is also an unviable system.

June 29 at Sheremetyevo Airport. The line to go through exit customs wasn't moving. The officer was examining exiting Russians with all deliberate sloth. In half an hour, two people were cleared. The next woman had forgotten to fill out a currency declaration and was sent back to get one and fill it out in front of the officer while he waited lazily. Suddenly, there was a loud noise. A senior officer spotted what was going on. At the top of his lungs he screamed at the officer: WHY are you holding everybody up? Take care of the others while she is writing! Our officer jolted to consciousness and waved us through.

After passport control, we were in the international zone. I looked up at the railing on the mezzanine level just in case and was surprised to see the drying clothes still there. I went upstairs. There weren't as many, and the children seemed to be gone, but after about ten months there was still a group of stranded Somalians living in the airport, sleeping on cardboard. They had fled the starvation and war in their own country on flights that had a stopover in Moscow. Because they had no papers for the country of final destination, the Russians would not let them reboard or enter the country. There were at least fifty in this limbo the previous time I had come. The UN is planning to do something, an airport policeman insisted.

I looked for the local (free) phone that used to be near the coffee shop. Gone. But there was another phone, installed by a Western company, and the cost for a local call was $2.00 PER MINUTE! Let anybody who questions regulation take note.

These notes do not paint a balanced picture of an exciting country undergoing unprecedented transformation. Nor do they sufficiently celebrate a people who are loyal friends and who can transform a kitchen table and a cup of tea into a place of privilege and learning. Instead, I have isolated points which may help explain the current crisis.

I also don't want to provide an excuse for self-righteousness. The profiteering from East Europe's difficulties is a Western affliction, as well. It would be hard, for example, to imagine anything more cynical than the behavior of the European Bank for Reconstruction & Development in spending twice as much money on its own luxuries as it distributed to the East (leading to Bank Chairman, Jacques Attali's belated resignation), but that, and the rest of the economic crisis in the West, is another aspect of the analysis.

On the way back from Moscow, I attended the annual Economics Colloquium at NATO. The year's subject was East Europe and the CIS. I ran into a long-time Russian acquaintance who used to work at a Soviet institute that studied the world's labor movements. We had already chatted a couple of times during the conference when he drew close and said, "You know, Eric, I am surprised to see you here. NATO is usually associated with right wing politics." I looked at him, and remembered the past. Then I remembered that the new darlings of Russia's democratic intellectuals are Ronald Reagan and Margaret Thatcher, and that the same company which was grabbing off Moscow's best real estate was also publishing translations of Ayn Rand.

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Contact: Eric Fenster moscowtrip2007@yahoo.com with questions or for more information.