ad info

CNN.com
 MAIN PAGE
 WORLD
 ASIANOW
 U.S.
 LOCAL
 POLITICS
 WEATHER
 BUSINESS
 SPORTS
 TECHNOLOGY
 NATURE
 ENTERTAINMENT
 BOOKS
 TRAVEL
 FOOD
 HEALTH
 STYLE
 IN-DEPTH

 custom news
 Headline News brief
 daily almanac
 CNN networks
 CNN programs
 on-air transcripts
 news quiz

  CNN WEB SITES:
CNN Websites
 TIME INC. SITES:
 MORE SERVICES:
 video on demand
 video archive
 audio on demand
 news email services
 free email accounts
 desktop headlines
 pointcast
 pagenet

 DISCUSSION:
 message boards
 chat
 feedback

 SITE GUIDES:
 help
 contents
 search

 FASTER ACCESS:
 europe
 japan

 WEB SERVICES:
  y banner

The personal side of Russia's financial problems

Dougherty By Jill Dougherty
CNN Moscow Bureau Chief

In this story: August 28, 1998
Web posted at: 8:58 a.m. EDT (1258 GMT)

MOSCOW (CNN) -- Every day now in Moscow, Russians line up at banks, hoping to salvage what they can of their life savings.

They wait for hours. In the end, all they are allowed to withdraw is $500 per day. So they return the following day, hoping against hope their bank won't be bankrupt before they can get their money out.

There's a new kind of victim in this financial crisis: Russia's middle class, so few and so vulnerable.

One woman shelves renovation plans ...

bank
bank
People scrambled to withdraw their money from Russian banks this week as a banking crisis worsened and the rouble collapsed  

A friend of mind is a good example. She's 35 years old and works for a Western company. Two years ago, when the Russian government finally brought stability to the ruble, she deposited her savings -- almost $20,000 -- in a commercial bank savings account.

Like most Russians, she had weathered the 1,000 percent inflation of the early '90s. But she began to trust in stability.

She had just begun to renovate her apartment. Now, that project is canceled, as she has nothing to pay the workers with. And her trust in banks is gone.

My friend is educated. She knows the textbook reasons for market reform. But the kind of "market reform" her government followed could very well destroy everything she's worked for.

Yet, she is lucky. She still has a job and good prospects for the future.

... Another laughs bitterly as bread prices rise

Russians with less -- less education, less money and even less hope -- are seeing the few rubles they have lose value daily.

One cleaning woman I know was in shock as she returned recently from the market: bread, eggs, everything soaring in price in just a couple of days.

She doesn't fully understand the reasons for the crisis, but she certainly knows the result.

As she watches the new/old prime minister, Viktor Chernomyrdin, on television, she's filled with scorn.

When I mention President Boris Yeltsin, she laughs bitterly. To her, he's a cartoon figure, hiring one day -- firing the next. But laughing doesn't stop prices from rising.

The abiding grip of the 'oligarchs'

There are some people who will survive this crisis intact, people who bought up the factories and industries of the former Soviet Union for 10 cents on the dollar.

handshake
Yeltsin, right, with Chernomyrdin on Monday  

Since communism collapsed they have taken an estimated $80 billion abroad, depositing it in so-called "offshore" accounts. If the Russian economy disintegrates, they can simply pack their bags.

This week two key figures in the previous government that Yeltsin fired, Prime Minister Sergei Kiriyenko and Deputy Prime Minister Boris Nemtsov, said they were removed because they dared to cross Russia's financial barons, the so-called "oligarchs."

Kiriyenko and Nemtsov were planning to force into bankruptcy some major companies that refused to pay taxes to the federal government. But these leaders say the oligarchs put pressure on Yeltsin, and he caved.

Stories like this don't faze many average Russians, who take it as a given that the oligarchs control their country. These average Russians, who were told that "market reform" would make their lives better, never really did fully trust that reform.

It turns out the lucky ones kept their money in dollars, and they kept their dollars in their mattresses.

"Russia will never change," one young Russian man told me. "All they do is rob people."

It sounds so cynical. But, like some of his fellow Russians, he was just beginning to believe things might, at last, be different.

Before the crisis, Russians used to laugh about a comment by Chernomyrdin, when he was prime minister the first time, that became famous: "We tried to do our best, but it turned out the way it always does."

It could almost make you cry.

Related stories:
Latest Headlines

Today on CNN

Related sites:

Note: Pages will open in a new browser window

External sites are not
endorsed by CNN Interactive.


SEARCH CNN.com
Enter keyword(s)   go    help

Back to the top
© 2000 Cable News Network. All Rights Reserved.
Terms under which this service is provided to you.
Read our privacy guidelines.