Crisis Plan Angers Soviet Depositors

APNadezhda Snychkova's mother, Yelena, showing a record of lost savings at Sberbank in her apartment last month.
Nadezhda Snychkova's one-room apartment on the fringes of Moscow, where she lives with her college student daughter and blind, 89-year-old mother, has just enough room to squeeze in a couch and a bed.

Her mother, Yelena, had worked for decades to save for a bigger place. But the family's savings, and dreams of a three-room apartment, evaporated on June 20, 1991, when the Soviet government froze all bank deposits.

Even as the Kremlin is handing out billions of dollars in loans to bail out billionaires, many Russians are still owed money from frozen deposits, which lost their worth as inflation soared and the economy collapsed.

Seventy million people had 315 billion Soviet rubles deposited in bank accounts in 1991, worth $190 billion at the official rate at the time. The money's value today is difficult to calculate because the Soviet-era currency was not freely exchangeable and the ruble has since gone through inflation, a currency collapse against the dollar and the loss of three zeros. The government says the deposits are worth 12 trillion new rubles, or $360 billion, in today's money, and has finally come up with a plan to help compensate depositors.

But the account holders complain that they are being offered only token payments.

Finance Minister Alexei Kudrin pledged last month that every Russian would get double the 1991 face value of their deposits back by 2011. Under the plan, the government will pay 240 billion rubles ($7 billion) in compensation over the next three years.

This year, everyone older than 43 is eligible to get their deposits back. Under the government plan, they'll receive between 1 and 2 of today's rubles for every Soviet ruble in their account. The amount depends on their circumstances, with the disabled and veterans, for example, getting the higher figure.

Economists say the Soviet-era deposits should be multiplied by at least 40 to reflect their true value.

"Even in our dreams, we would not think that the state could cheat us," said Snychkova, recalling how the bank refused to let her withdraw her money in June 1991. "Those who stole this money made fortunes on the tears and blood of the people."

Now Nadezhda has gone to court to get her mother's 13,000 Soviet rubles back. "I realized that I had to fight for that money, which was earned with very hard work."

For almost two decades, the government has pledged to help depositors, but critics say the scale of the plan is dwarfed by the government's aid to the industrial empires of Russia's tycoons.

"It is absurd that oligarchs are getting aid from the government while those who lost all of their savings are not," said Boris Kheyfets, senior economist with the Russian Academy of Sciences.

Officials have neither fully repaid the debt nor repudiated it, leaving the issue in doubt. During the boom years that began in 1999, soaring oil prices pushed government revenues to $1 billion a day, but only now has the state begun paying partial compensation.

Vladimir Khamkalov's three-room apartment in comfortable southwest Moscow was worth 12,000 rubles back in 1991. "I had 130,000 rubles in my Sberbank account -- you can imagine how many apartments I could buy with this money," the 80-year-old foreign service veteran said.

Since 1991, Khamkalov has received some 5,000 rubles -- the price of dinner for two at a good Moscow restaurant.

"They're making fools of us -- this is the most humiliating thing," he said.

Under a 1995 law, the depositors were to receive state bonds.

"This would have created a substantial group of people who received ownership as a result of economic reforms," said economist Alexander Belchuk. "But the authorities wanted to give it to those who would manage the assets effectively -- would-be oligarchs."

In the midst of the 1996 presidential election campaign, the parliament passed legislation to compensate depositors for some of their losses. Just days after winning re-election, President Boris Yeltsin signed the bill into law. But the terms of the bill were never implemented.

The Finance Ministry describes current payments as compensation but not clearance of the debt. Some depositors say they are frustrated by the government's seeming inability to resolve the matter.

"The government provides the answer of an ostrich," Kheyfets said. "They should either waive the obligations or acknowledge and honor them."