--------------98192D791E1A8E9D20D194B5 Muscovites' faith in capitalism is crushed By Chrystia Freeland and Charles Clover in Moscow "The state stole our money," said Roman, a 32-year-old Moscow marketing director, who has helplessly watched $30,000 drain out of his savings account as the rouble has more than halved in value over the past 10 days. Roman, who held a 10-hour vigil yesterday outside a branch of SBS-Agro, the second most popular savings bank, in a futile effort to retrieve his money, said his faith in Russian capitalism had been crushed. "We believed in market reforms. We trusted the promises of our government and our central bank when they said, 'Go to the commercial banks, they will give you higher returns than the state'," Roman said. "But this is a lesson - I will never again put my money in a Russian bank." But Roman and the 50 other aggrieved depositors patiently waiting for their money are the lucky ones. According to poll data, only one in four Russians claims to have savings at all. The sum of all household deposits is roughly 130bn roubles, or 4 per cent of gross domestic product, meaning the average depositor holds only 3,500 roubles ($350). Most Russians are too poor - or too suspicious - to have been affected by the crisis in the banking system. The best-off are those who hold some of the $35bn in hard currency. The millions of workers whose wages have been unpaid for months, or even years, have been scratching out a diet in garden plots and living on their parents' pensions. As the rouble dissolves, the prospect of a pay-off of accumulated wages is vanishing. "All my workers have been treating the company as a sort of bank, and seeing their unpaid wages like a kind of savings," said Joseph Piradashvili, director of Zapolarneftegaz, a gas exploration company north of the Artic circle. "Now, in dollar terms, their savings have halved and soon the price of food, which must all be imported, will rise." Echoing the shortage-stricken Soviet days, those Russians who have cash are finding that there is less to buy. Some shops, and even traders in city bazaars, yesterday locked their doors to Moscow customers. The merchants are waiting for the currency to hit bottom before they resume trade. "We lost $1,800 on Tuesday alone because the rouble fell, so now we just sell for a few hours and then go home," said Lena Burmistrova, who sells Austrian shoes at a stand in Luzhniki, one of Moscow's most popular markets. "Probably Luzhniki will just close down for a week or 10 days. Everyone is in horror. No one knows what to do." Ironically, only the people who had already been reduced to penury by the market reforms are finding something to cheer about. Liuda, a 47-year-old bureaucrat in Vladivostok, Russia's far eastern outpost where water is rationed and black-outs are routine, lives on her mother's meagre pension. She thought she would never see a pay cheque again, but now she has some hope. "Maybe now they will print some roubles and I will get my salary. You can't live without money and now maybe I will get a little bit." -- Gregory Schwartz Dept. of Political Science York University 4700 Keele St. Toronto, Ontario M3J 1P3 Canada Tel: (416) 736-5265 Fax: (416) 736-5686 Web: http://www.yorku.ca/dept/polisci --------------98192D791E1A8E9D20D194B5 --------------377B9B85520F954C365F19EF <HTML> <B><FONT COLOR="#000000">Muscovites' faith in capitalism is crushed</FONT></B> <P><B><FONT COLOR="#666666">By Chrystia Freeland and Charles Clover in Moscow</FONT></B> <P><IMG SRC="cid:[EMAIL PROTECTED]" ALT="Russia" BORDER=0 HEIGHT=130 WIDTH=130 ALIGN=LEFT><FONT COLOR="#333333">"The state stole our money," said Roman, a 32-year-old Moscow marketing director, who has helplessly watched $30,000 drain out of his savings account as the rouble has more than halved in value over the past 10 days.</FONT> <P><FONT COLOR="#333333">Roman, who held a 10-hour vigil yesterday outside a branch of SBS-Agro, the second most popular savings bank, in a futile effort to retrieve his money, said his faith in Russian capitalism had been crushed.</FONT> <P><FONT COLOR="#333333">"We believed in market reforms. We trusted the promises of our government and our central bank when they said, 'Go to the commercial banks, they will give you higher returns than the state'," Roman said. "But this is a lesson - I will never again put my money in a Russian bank."</FONT> <P><FONT COLOR="#333333">But Roman and the 50 other aggrieved depositors patiently waiting for their money are the lucky ones. According to poll data, only one in four Russians claims to have savings at all. The sum of all household deposits is roughly 130bn roubles, or 4 per cent of gross domestic product, meaning the average depositor holds only 3,500 roubles ($350).</FONT> <P><FONT COLOR="#333333">Most Russians are too poor - or too suspicious - to have been affected by the crisis in the banking system. The best-off are those who hold some of the $35bn in hard currency.</FONT> <P><FONT COLOR="#333333">The millions of workers whose wages have been unpaid for months, or even years, have been scratching out a diet in garden plots and living on their parents' pensions. As the rouble dissolves, the prospect of a pay-off of accumulated wages is vanishing.</FONT> <P><FONT COLOR="#333333">"All my workers have been treating the company as a sort of bank, and seeing their unpaid wages like a kind of savings," said Joseph Piradashvili, director of Zapolarneftegaz, a gas exploration company north of the Artic circle. "Now, in dollar terms, their savings have halved and soon the price of food, which must all be imported, will rise."</FONT> <P><FONT COLOR="#333333">Echoing the shortage-stricken Soviet days, those Russians who have cash are finding that there is less to buy. Some shops, and even traders in city bazaars, yesterday locked their doors to Moscow customers. The merchants are waiting for the currency to hit bottom before they resume trade.</FONT> <P><FONT COLOR="#333333">"We lost $1,800 on Tuesday alone because the rouble fell, so now we just sell for a few hours and then go home," said Lena Burmistrova, who sells Austrian shoes at a stand in Luzhniki, one of Moscow's most popular markets. "Probably Luzhniki will just close down for a week or 10 days. Everyone is in horror. No one knows what to do."</FONT> <P><FONT COLOR="#333333">Ironically, only the people who had already been reduced to penury by the market reforms are finding something to cheer about.</FONT> <P><FONT COLOR="#333333">Liuda, a 47-year-old bureaucrat in Vladivostok, Russia's far eastern outpost where water is rationed and black-outs are routine, lives on her mother's meagre pension. She thought she would never see a pay cheque again, but now she has some hope. "Maybe now they will print some roubles and I will get my salary. You can't live without money and now maybe I will get a little bit."</FONT> <P>-- <BR>Gregory Schwartz <BR>Dept. of Political Science <BR>York University <BR>4700 Keele St. <BR>Toronto, Ontario <BR>M3J 1P3 <BR>Canada <P>Tel: (416) 736-5265 <BR>Fax: (416) 736-5686 <BR>Web: <A HREF="http://www.yorku.ca/dept/polisci">http://www.yorku.ca/dept/polisci</A> <BR> </HTML> --------------377B9B85520F954C365F19EF R0lGODlhggCCAMT/AP///62trbWtrdbGxqVaSud7Y95rUpRCMc5aQr1SOfe1lO+cczEhGJx7 Y1pCMWtaSq2chHtzWpSUcwBrpYycpVqt3mOt3kqczgBCawBShPf3/84AKZwAGFoIEM4hKQAA ACwAAAAAggCCAEAF/6AgDKSmAcB5oizrMDD8OnQ9x7PtPLotP6KgkDQwtVAaknC5JBaVTObx GAiISqZsltGACCADxeA7gEC6ErDCSwIoTGUBwEn8fiXpR0T/6PdnWFkpSQNVAlZWI4FaWk+J iIeRUy2RFB8fPxJ7MQw1B58EoQ2hogQFBgWpC6sFCwUKC7CuCxILDQsGZ2ddZhBpEBF7LzBG cImKjMnKjESQiJMsEpgyORESDXoNow0JBwkIBAgJBggG5qmtrasK7Ouyq/CsrOgFBAehvsA0 PBGERMsAlbFoRAISNBQCLHFioCdCF3ujQn3qlqAiAgSn6LViJwsWx1ixPs6adUocgk8HHP8Q aLDnQadCiwLKXDGQYKGDACjodDCtUw2fDlB6O1lxnKp0qkCC9OguHjxUI1kZ+MRjBw0GOnVW 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