...The tiny anti-Kremlin parties are doing their bit to address the
crisis: the National Bolshevik Party has been putting fliers on
cashpoints around Moscow: 'Take your money, citizen, before it's too
late!' But television doesn't know it exists - or, as Vedomosti politely
put it, 'doesn't wish to worry the populace unnecessarily'. Television
knows about the perfidious pro-Western president of Ukraine, Viktor
Yushchenko, who's been selling weapons, it turns out, to anyone who asks
(including Georgia and Somali pirates). Television knows about the
important work of Prime Minister Putin, who visits factories, and
President Medvedev, who meets political figures in the Kremlin. And
television knows about the crisis abroad: the troubles in the US, the
troubles in Europe, the troubles in Iceland (which wants to borrow money
from the Russians). It knows that whatever effect all these things may
have on Russia, Putin and Medvedev are on the case.  

 * LRB
 * 20 November 2008
http://www.lrb.co.uk/v30/n22/print/gess01_.html

Diary
Keith Gessen

The financial crisis - or, as we like to call it here, 'the effects of
the American and European financial crisis on Russia' - has taken a
little while to get going, but it's going now. Yesterday my grandmother
sat me down for a serious conversation: she wanted to know if she should
take her rouble-denominated life savings out of the Sberbank and put
them into dollars. Everyone's a financial adviser now. Or rather, I'm a
financial adviser now. This is not good.

What should we do? My grandmother's life savings are not very
substantial. In fact she said as much: 'Should we take my pathetic life
savings out of the bank?' My grandmother worked in Soviet publishing for
fifty years, and then worked for another ten on her own as a translator.
Towards the end of her translating career, when she turned 80, she had
trouble sitting at the desk for too long at a time, so would lie on the
couch, read a page of manuscript in the original, and then get up and
translate the page from memory at her typewriter - in my opinion an
excellent way of avoiding an excessively literal and lifeless
reproduction. Anyway, as far as I can tell, she's already lost her
savings a few times thanks to various devaluations - in 1990 and 1998 -
and to one early 1990s pyramid scheme. So it's a miracle she has any
money to lose at all, but she does, and now she's worried about it. The
Sberbank is around the corner. The question is: do we start a run on it?

I'm in Moscow for the year to keep my grandmother company and be
generally helpful - go to the vegetable market, close the windows at
night, that sort of thing - though I didn't expect to be spending quite
this much time checking the status of rouble futures on the Chicago
Mercantile Exchange. When I left the States, in early September, the Dow
was going into free fall; when I got here, the Russian stock exchanges
were falling too, but aside from that the situation was calm. Earlier in
the year, Russia's finance minister, Alexei Kudrin, had called the
country 'an island of stability in the worldwide turmoil'. This soon
proved unrealistic, though many clung stubbornly to the notion. In late
September the pro-Kremlin political analyst Vyacheslav Nikonov explained
the world crisis (and its effects on Russia) on an evening news show;
why, he was asked, can't Russia break away from the failing global
financial system? Nikonov, the grandson of Vyacheslav Molotov, Stalin's
foreign minister, smiled indulgently. 'In the age of globalisation,
everyone is connected to everyone,' he said. His interlocutor, the host
of the show, was not going to be put off by this pabulum. 'Then why
can't we lead and they follow?' he demanded. Nikonov's smile froze on
his lips; it was one of those moments in the life of a pro-Kremlin
analyst when he has to say something against his intellectual
conscience. Which was: 'For that to happen . . . we'd have to become a
global financial centre.' Even the host could tell that Nikonov didn't
think a country whose inscrutable laws were so liberally interpreted by
corrupt bureaucrats stood very much chance of becoming a global
financial centre. 'But,' the host pursued, 'when last year we proposed a
new' - he meant non-Nato - 'European security arrangement, people
laughed. Now we're proposing it again and it's being taken quite
seriously.' 'Yes,' Nikonov readily agreed, moving onto the more solid
ground of nationalist propaganda. 'The August events in Georgia
solidified our standing in Europe. We are more respected now.'

This has been the nature of the Russian reaction to the crisis: a
combination of denial, bluff assertion and split consciousness. The
split consciousness is institutionalised in the media. It's not as
though the crisis has been a secret: the Moscow Times, an
English-language daily and longtime flagship of the Anglo-American
business and diplomatic community, has been writing about nothing else
since I got here, and Kommersant and Vedemosti, the country's two best
business papers, as well as the two best papers full stop, have been
covering it carefully. A few weeks ago Kommersant reported that someone
had been unable to withdraw money from a Globex cashpoint in Moscow,
causing, at the very least, panic among journalists who went out on the
town to find other people having similar trouble (they couldn't). The
influential website Gazeta.ru has been running online chats with highly
placed financial people, among them the very angry president of the
Association of Russian Banks. Question: 'I've transferred all my savings
to Sberbank. Was that the right thing to do?' Answer: 'While you're at
it you should take all your furniture down to the train station and
stick it in left luggage.' (Sberbank, being government-owned, is not
liked by the Association of Russian Banks.)

The guys I play hockey with, a number of whom are bankers, know about
the crisis. 'We could start farming,' one of them suggested a while ago
as we sat in the locker room after another loss to our rivals.
'I have a balcony. We can raise a goat.'
'Or mushrooms. We could grow psychedelic mushrooms.'
'No, the FSB controls that market. The minute you came out with your
mushrooms they'd be visiting you.'
'Gentlemen!' Our captain wanted us to get back to business. 'There is a
financial crisis. But we are also in a hockey crisis.'
'We're better off with a goat,' the first banker continued. 'It will
give you milk - and progeny!'

And the stock market - boy, the stock market. The two Moscow stock
exchanges, the Moscow Interbank Currency Exchange, which deals in
roubles (MICEX), and the Russian Trading Stock Exchange, which deals in
dollars (RTS), began losing value over the summer, after international
investors got nervous: first there was a conflict over the future of a
BP joint venture in Russia; then there was the war with Georgia; and
finally Putin's Putinesque suggestion that the recalcitrant owner of
Russia's largest mining company should watch his health, ha ha. But
since the collapse of the American stock indices the Russian exchanges
have been plummeting. In fact over the past few weeks they've been shut
down more often than they've been working: trading is suspended whenever
either exchange moves 10 per cent up or down. Naturally, this doesn't
make anyone any calmer. Every time the regulators open the markets, they
start falling again.

The tiny anti-Kremlin parties are doing their bit to address the crisis:
the National Bolshevik Party has been putting fliers on cashpoints
around Moscow: 'Take your money, citizen, before it's too late!' But
television doesn't know it exists - or, as Vedomosti politely put it,
'doesn't wish to worry the populace unnecessarily'. Television knows
about the perfidious pro-Western president of Ukraine, Viktor
Yushchenko, who's been selling weapons, it turns out, to anyone who asks
(including Georgia and Somali pirates). Television knows about the
important work of Prime Minister Putin, who visits factories, and
President Medvedev, who meets political figures in the Kremlin. And
television knows about the crisis abroad: the troubles in the US, the
troubles in Europe, the troubles in Iceland (which wants to borrow money
from the Russians). It knows that whatever effect all these things may
have on Russia, Putin and Medvedev are on the case.

Medvedev is shown a lot on television, about as much as Putin, and
usually just before him in each newscast. He is young, in his early
forties, but surprisingly lethargic. He's managed to pick up the Putin
manner of seeming annoyed when he has to explain anything, but he talks
in a sleepy way, often ducking his head into his chin at the end of a
sentence. It's as if he's worried the batteries placed in him at the
beginning of the day by Putin's people might run out. He was supposed to
give his first State of the Union address two weeks ago but the address
was postponed to give him time to 'work on a new draft'. It's hard to
imagine Putin - who, in the grand tradition of the Soviet nomenklatura,
submitted a plagiarised thesis for his master's degree - working on a
draft of anything, but the Kremlin likes to show photos of Medvedev at
his computer. So it's easy enough to imagine him being sent to his room
to improve his State of the Union address while serious men take care of
serious business.

To be fair to Putin-Medvedev, this may be for the best, at least as far
as my grandmother's life savings go. The Russians get to worry about
other countries in crisis (the way they worried about Americans after 11
September, despite having a much more serious domestic terrorism
problem), and meanwhile keep their money in the bank, and, most
important of all, keep it in roubles. Because the rouble, for the
moment, is the biggest problem facing the government. If oil prices fall
too low and the rouble fails, as it did in 1986 (though this was kept
secret) and in 1998, and if the coal miners go on strike again because
they haven't been paid and block the trans-Siberian Railway, savings
will be wiped out. This would be a national humiliation - something more
destabilising to regimes, as the Putinists know, than mere economic
collapse. A few weekends ago there were rumours that the rouble's
collapse was imminent, and the dollar started climbing away from the
official rate at the independent currency exchange kiosks around town.
Reporting on the rumours the next day, Kommersant quoted a banker saying
that Russians had a 'genetic' memory of 1998, and were being told, by
their genes, to go and buy dollars. Except the truth is that Russians
have an actual memory of 1998. Even I have an actual memory of 1998. The
collapse of a national economy is not a pretty thing, and it was at this
point - the end of the Yeltsin era - that the American commentariat
began wondering 'who lost Russia?' as if Russia was a hat someone had
left at a party or a child who'd wandered off at the fair.

Kudrin has been insisting that the government will do everything it can
to keep the rouble steady, and I want to believe him. December rouble
futures on the CME have the rouble at 28 to the dollar - it's currently
at 27. And inflation is temporarily under control. A few weeks ago my
grandmother noticed that the price of the poppy-seed pie she likes had
gone up 12 roubles (50 cents); then, having forgotten this, she
proceeded to notice it again and again for the next week. It was
hyperinflation! But in fact the price of the poppy-seed pie had gone up,
once, to 95 roubles, and stayed there.

By now information on the crisis is just about everywhere. The other
night I saw a subway worker reading Moskovsky Komsomolets. 'Oy, chto
budet!' said the front page of the tabloid. 'No ne defolt' - 'OMG! But
no default.' Meanwhile, in the Moscow Times, a melancholy item from the
Bloomsberg wire service: Russian oligarchs have lost $237 billion, or 62
per cent of their wealth, on the Russian stock exchange in the past five
months. It's a lot of money, but it's also a psychological blow.
Russians are proud of their oligarchs. In September, Roman Abramovich's
girlfriend set up a large retrospective for the conceptualist artists
Ilya and Emilia Kabakov at her new exhibition space, Garage. Pyotr Aven,
the president of Alpha Bank, made news with a controversial book review
of Zakhar Prilepin's Sankya, a fictionalised account of the anti-Kremlin
National Bolshevik Party. And Mikhail Prokhorov, the former Norilsk
nickel magnate, launched the first issue of a new magazine for the
transcontinental Russian elite, called Snob. It comes in a sort of box,
which unzips in front like an expensive dress, and costs $20.

No default = no problem, at least for the moment. My local Coffee Bean
still serves its $4 cappuccino to a packed house, and down the street
Coffee Mania is filled with people drinking $9 cappuccinos. And if some
of the absurdly overpriced restaurants and boutiques that have continued
opening in Moscow over the past decade close, we'll get over it.

It helps too that this time Russia is not in it alone. Watching Putin
these past few weeks has been unpleasant but riveting. The other day he
was talking to the Chinese, arguing that Russia and China (and Vietnam
and Belarus) should consider conducting their transactions in roubles.
(The Chinese said they'd think about it.) In early October, he held a
meeting with a group of Communist politicians and gave them, as is his
wont, a hectoring speech. He has a high, screechy voice, with the
slightly lazy pronunciation that is the hallmark of the Russian
bureaucratic-criminal class, and every time I've seen him on television
recently he's been leaning forward in a threatening way and enunciating
every syllable as if he were speaking to idiots. He brushed aside the
Communists' demands and then, warming up to things, began to talk about
the United States. 'There is no question that the age of American power
is finished,' he said. 'The time when they were a model of democracy,
and a leader of the world, is over.' And you began to think that if the
Russian stock market had to all but disappear; if Putin's friends the
oligarchs had to lose 230 billion dollars; if eventually this meant that
certain supply chains were going to be disrupted and people might have
trouble finding food a few months down the line - well that would be a
pretty small price to pay if only we could stop listening to those
self-righteous fucking Americans.

What would it take for this regime to stumble? People have been saying
for a long time that Putin will not be tested until oil prices fall. Now
oil prices are falling, and Putin-Medvedev are mostly blaming the United
States and stoking up anger at Ukraine's president. If oil prices keep
falling, their magnificent cash reserves - $500 billion before the
current crisis - could, in a country of 140 million people, turn out to
be less handy than they'd thought. There is right now no movement and
certainly no political party that could challenge the Kremlin - the
Kremlin has spared no money or effort in making sure of that. This week
Eduard Limonov, the charismatic poet and cult-like leader of the
National Bolshevik Party, wrote up his impressions of a party held to
celebrate the courageous radio station Ekho Moskvy. Across the crowded
hall at the Prague restaurant, he saw his old friend and nemesis
Vladimir Zhirinovsky, the long-time leader of the fake opposition party
LDPR:

    Seeing each other, we grinned, and, Vladimir Vladimirovich pushing
aside his dinner, and I handing my glass of wine to my bodyguard,
stepped towards one another and embraced.

    Zhirinovsky: So your time has finally come!
    Me: And yours also, Vladimir Vladimirovich, don't you think?
    Zhirinovsky: Yes, ours too, but you'll precede us to the barricades
. . .
    Me: And you'll follow . . .
    Zhirinovsky: Yes. And you'll all die on the barricades, and we'll
seize power.
    Me: Except we won't all die, and we'll seize power.

Clown, meet clown. In fact, it's more likely that Zhirinovsky will
continue meeting Limonov in the Prague restaurant while the regime does
whatever it has to do.

And yet. If things are going to fall apart, Moscow could well be the
place they fall apart most quickly. What happened in the years of
extremely high energy prices was something more familiar than a yearning
for the 'strong hand'. The Russian people were offered a bribe and they
took it. Why not? But now the bribe is running out, and anything could
happen. What you realise under the giant vaulted ceilings of Garage, or
simply on the streets, in the alleyways, where an ancient metropolis was
once rearranged to serve the people, is that it's happened here before.

Keith Gessen is a founding editor of n+1 and the author of All the Sad
Young Literary Men. He is living in Moscow with his grandmother.