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. Last Updated: 07/27/2016

Wealthy Russians Pay as They Go

Dressed in a cashmere coat and Italian leather shoes, Valery Pavlov walked into Trinity Motors last week to buy his fourth car.


He picked out a maroon Caprice Classic that cost 16 million rubles, the equivalent of $28, 000, opened his briefcase and paid half the car's price in cash.


Such is the way that Pavlov and other member's of Russia's nouveau riche do their spending in today's inflationary economy: early and often.


With little faith in the increasingly worthless ruble and little trust in the government, Pavlov spends money as fast as he can make it.


"I live in the present day and spend whatever I have", he said. "It's no good to keep money. My friends often ask me what happens if I go bankrupt tomorrow? I tell them I'd start again".


As this country stumbles toward a market economy, the vast majority of Russians have seen their living standards erode as prices have far outpaced wage increases.


But a small, select group has found wealth and shelter in the country's secondary dollar-based economy.


They buy and sell Western goods, either for dollars or ruble equivalents, keep their earnings in Western bank accounts or turn their rubles into imported goods that retain value as the ruble declines. and they export goods and services abroad to earn hard currency.


Others, of course, have found entry to the elite class through illegal routes: prostitution, theft of state goods and the illegal export of state resources, such as oil and precious metals.


Lyudmila Khakhulina, a deputy director of the Russian Center for Public Opinion and Market Research, defines the rich as those whose income exceeds 20, 000 rubles per month per family member - $35 at the current rate of exchange, but three times the minimum wage. Only 1 percent of the country's population falls into this category, compared to 80-90 percent who are living below the poverty line, she said.


The business newspaper Commersant estimates that as many as 3 million Russians bring home $500 to $1, 000 each month and that nearly 100, 000 Russians earn more than $2, 000 a month.


Over the last six months, evidence of affluent Russians seems to be everywhere. Luxury cars careen through Moscow's Lada-laden streets. Hard-currency shops full of Russians able to pay with stacks of dollar bills stand beside dank state stores. The wealth is conspicuous because it contrasts so sharply with the legacies of the Soviet era.


Sheremetyevo International Airport is filled with Russians jetting off to Paris, London, Helsinki and other world capitals. Casinos draw Russians willing to gamble away hundreds of thousands of rubles in a single night.


Khakhulina estimated that the bulk of Russia's wealthy are 25 to 40 years old.


"Young people can afford to take risks", she said. "They didn't grow up with the social supports of the state. Besides, they want more money".


At 35, Pavlov fits the profile. He is the director of an arts promotion company with offices in Moscow and Sochi, and makes his money by promoting Russian ballet companies and other artists in Russia and abroad.


He said he spends an average of 2-3 million rubles a month, but can go through as much as 10 million rubles. He provides for his girlfriend, who does not work and only shops at hard-currency stores. He often jets off to Austria, where he hopes soon to open a branch office for his business.


Pavlov got his training as a businessman in Yekaterinburg, where he was a policeman on the city's anti-speculation task force for five years until 1988.


"I practiced economic crimes even while I was arresting others for them", he said. "I was selling jeans. It was dangerous then". But Pavlov also hangs on to social mores from the past. Though he could afford any apartment in Moscow, he lives modestly in a one-room flat.


"My friends scold me", he said, "but I am indifferent. For me, it is just a place to lay my bones".


Not everyone has difficulty breaking with the past. Vitaly Voronin, 30, and his business partner, Valentin Romanko, 25, seem to relish the present.


With 30 different business concerns employing 600 people, the two are involved in metals, agricultural exports, construction of a hotel near Sheremetyevo airport and the purchase of a concrete factory outside of Moscow.


After four years of nonstop work, they have built a corporation that grossed $20, million last year. They both live in huge apartments, each has four cars and they employ full-time chauffeurs for their spouses.


"There are lots of loopholes here", said Voronin. "In practice it is not possible to operate without breaking the law. If you obey one law, then invariably you break another. But we do decent business".


In contrast, a young woman who would give her name only as Natasha did not make any representations about keeping within the law. Natasha, 25, said she rarely works more than 10 hours a week, but manages to bring in $5, 000. She is a prostitute.


Natasha never wakes before noon and spends afternoons thumbing through the latest fashion magazines deciding what designer clothes to purchase on her next trip out of the country.


At night, impeccably dressed, she travels from night club to night club, letting men pay her way. Her wealth enables her to bypass most of the day-to-day struggles and worries plaguing so much of Russian society.


But then again, she must hide her career from her family and many of her friends. She says she has no regrets. She likes being rich.


"I know how to work", Natasha said in perfect English between sips of Campari and orange juice. "If I return to my old work I'll have 10, 000 rubles a month and have to work 12 hours a day. I want to work for myself".


For the last 18 months, a dingy Moscow hotel room has doubled as another woman's office.


The place is crammed with Reebok tennis shoes; last summer it was stuffed with Marlboro cigarettes and a liquor called Royal spirit that kept arriving in trucks from Belgium in the middle of the night.


The woman, whose first name is Natalia, has always made the best of whatever life has thrown at her. In the "years of stagnation", she lived well from svyazi, the all-important contacts who were the key to good living in the Soviet era. Natalia's svyazi have adapted to the times. They are now her lucrative business connections. and yet, she herself cannot be said to have adapted to her new situation.


Though her assets include $10, 000 in a Western bank and a fur coat worth $2, 500, she still has a siege mentality. She buys four boxes of All-Bran cereal at the Irish House, even though she hates what she calls "Western rabbit food".


But having a stock of Western food - any Western food - makes her feel secure, protected from the uncertainties of Russian life.


As with other wealthy Russians, Natalia's rich lifestyle has a fleeting quality to it - it seems she does not really believe that it will all be here tomorrow.