Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Middle Class' Party Ends as Crisis Grows

The music is still playing and the beer is still flowing, but three weeks into Russia's latest crisis, the good times at the Chesterfield Cafe -- a popular watering hole for Moscow's high-living young professionals -- are already running on empty.

"This is the quietest night of the quietest week," said Chesterfield manager Martin Bainbridge, who left London's nightclub business 2 1/2 years ago to take part in Moscow's giddy expansion. "For a week and a half, I have had people coming in here, saying this is their last drink in Moscow. But it is worse for the Russians. ... watching their ruble literally disintegrate."

The financial turmoil that has brought Russia to its knees is taking a big toll on the small but visible middle class that arose here on the wave of this city's boom, working for banks, real estate and advertising agencies, start-up companies and Western firms, and spent money like there was no tomorrow.

It has also cut a swath through the class of foreign bankers, brokers, traders, technicians and adventurers. Now the ruble is crashing, and some are packing their bags.

Until these recent weeks, Moscow's professional elite had been insulated from Russia's economic ills. Their salaries -- paid on time and in dollars, or at least pegged to the dollar -- were high, in some cases higher even than Western standards. Their appetite for the good things in life, from expensive restaurants to designer clothes, changed the face of Moscow, giving it a flashy, if sometimes vulgar, glow.

Work in Moscow was easy to find, particularly for those Russians eager and able to take advantage of their newfound freedom: Unemployment, officially, was less than 1 percent and that didn't count the bustling gray economy, which has stubbornly persisted below the radar of government tax collectors.

Now, in less than a month, all that has changed. Spending patterns have already changed drastically. Cash registers are silent at Moscow's chic boutiques, the telephones are quiet at foreign auto showrooms and travel agencies are reporting a drop in bookings to Turkey and other vacation spots favored by Russia's new middle class.

Restaurants are seeing fewer diners, who, according to one manager, are talking more and drinking less once they see the exorbitant prices for imported wines and liquor.

At Chesterfield, Bainbridge has also had to adjust his business, and his menu, to the crisis. Shepherd's pie and fish and chips, made from local products, have substituted for T-bone steaks, imported from France. The restaurant, which used to be open around-the-clock, now opens at 6 p.m. and closes at 6 a.m.

"The party's over," said an Englishman, a telecommunications analyst who has already bought his ticket home on a Friday flight, bailing out of what he sees as a painfully botched business opportunity. "But it was good while it lasted, wasn't it?" added his drinking companion.

The gloomy atmosphere are a far cry from the old days, when Russians and foreigners, flush with cash, would drop by on their nightly round of Moscow's lively night life.

The bad news has come on like a steamroller. First came the banking crisis, and the blocking of bank transactions, including salaries and savings withdrawals. Then came the collapse of the ruble, which has sent prices skyrocketing and emptied the stores and markets of imported goods. Then came salary cutbacks, and now layoffs, or as some employers are describing it, temporary unpaid holidays.