by Michael Hammerschlag .... Published in Johnson Russia List- Oct 15, 98 (Center for Defense Information + Carnegie Corp)

The St. Petersburg shop owner changed my 10 dollars eagerly, greedily; but as we left, my girlfriend started sobbing, "He has rubles to change your dollars, but he can't pay me for my paintings" (that had been sold weeks ago). I steamed, wanting to go back and shake the money out of him, but she pleaded, "No, please don't- I need him". Russia, on the other hand,... doesn't.

Like the mugs in "Goodfellas", Russians hate to pay anyone, they don't kill them (usually)- but they make them wait 3-12 months for moneys owed them. This is a problem across the board: from the government and biggest industries, to the banks, to the small proprietors; and stems from the Communist ignorence of Capitalism (everything was done with mirrors and lies and the Government owned everything so it didn't matter if they paid), lack of cash, and the simple piggish principle that still runs Russia- "Everyone with power abuses it". They do it because they can get away with it. Nuclear missile submarine commanders aren't paid for 4 months, officers in charge of supplies in the Far East simply put the money in a bank while their troops starve to death, miners in 19 century Arctic hell-holes don't get paid for 6 months, businesses aren't paid for deliveries until they hire mobsters to collect their money with machine gun persuasion.

Across the country it's an explosive issue- with the government behind 6 months average on all wages, but if they pay, they destroy their budget, fuel inflation and endanger IMF loans of billions (though defaulting on them has taken care of that). Because of this Russian penchant, banks don't lend money, making small businesses incredibly difficult and more dependent on Mafia support and muscle. Without money people have had to rely on barter, which can't be taxed. It's a symptom of the raucous illegality and lingering brutality of the new Russia and responsible for negligible foreign investment compared to China or Eastern Europe. If you can't trust a business to pay, no business relationship is possible, and tales are rife of foreign investors stiffed, cheated, and forced out by Russian partners (or Mob threats). In fact a British group rated Russia, with it's constant wanton rule changes, omnipresent mafia extortion and official corruption: "the worst place in the world to do business" (beating out last years winner- Nigeria) America had a squandered opportunity to help build a legal and banking system in 1992-3, when Russians were literally begging for help. Then the industries bought from each other with no intention, ability, or desire to pay; and eventually, repetitively, the government paid the hundreds of billions of debt, totally destroying the ruble in the process.

With the oligarchs amassing stupendous fortunes, the obscenity of the non-payment crisis (as it's called) is glaring. The cream of Soviet society- the nuclear engineers in the secret cities- are now virtually starving, living on $30-50/month. One director of a nuclear research institute was so crushed by not being able to pay his people that he shot himself (luckily not with nukes). When the power company near Vladivostok started to shut off power for nonpayment to the mothballed nuclear Pacific fleet (with live reactors that needed cooling), commanders starting rolling tanks on the power plant. Electricity was restored.

Russians have shown superhuman patience, working for years for negligible wages, often getting paid in unsellable sofas or light bulbs. With the uprising by the coal miners (who had provoked the ouster of Gorbachev) and blocking of the Siberian railroad, it seemed things finally had to change. They did: the stock market, and the Ruble...... collapsed.

With the added misery of the economic collapse, peoples patience with not getting paid may finally be at an end, but the Communist Dumas idea of a solution is to print billions of rubles, wrenching the country back into dizzying inflation- giving the populace $1 with one hand and slipping $2 out of their pocket with the other. The rout of the reformers, the default on foreign loans, and Yeltsin's proposed power sharing with the Communists all bode ill for Russia's future. If Lebed were to seize power now, the majority of Russians MIGHT support him, but appallingly, he is only half as popular as Gennady Zyuganov- a hack who still defends the greatest monster in human history: Joseph Stalin. Russia needs and demands a strong leader and there are realistically (Yavlinsky is attractive, but he's been so disdainful of government that he hasn't DONE anything) only 2 alternatives: Lebed and Luzhkov- Lebed's more popular, tougher, more unpredictable, and more despised by the oligarchs, politicians and fat cats, who're terrified what he might do to their privileges. They should be. Once you've seen the rapacity and ruthlessness of the Russian rich, the reasons behind the 1917 Revolution become clear. One fall day in Detsky Mir (Children's World) Toy Store a stocky woman waved a 2 1/2" stack of 50,000R (~$100) bills around as the other women (who were living on maybe $50/month then), stared open mouth like beaten dogs. The piggishness and deliberate cruelty of the scene was striking. Yeltsin has simply let the social safety net disintegrate while a handful of hustlers have become spectacularly wealthy, and all across Russia, there are tens of millions who're tired of living like beaten dogs.



Michael Hammerschlag spent 2 years over 2 1/2 years in Russia and the Soviet Union, wrote commentary for Moscow News, &, Guardian, and Tribune, and We-Mui; did radio reports for Radio South Africa and KING-1090, and is writing a book on his experiences there.