Moscow Diary: Market forces

The BBC's James Rodgers examines the ups and downs of raw capitalism in Moscow, for Russians and expats alike. His diary is published fortnightly.

SOUVENIR HUNTING

"It's bomb-proof, nuclear-proof, and vodka-resistant," he claimed proudly. It was a hat.

Izmailovo market had a special buzz even in Soviet times

It was a well-rehearsed sales pitch, made in English, designed to draw in the hesitant souvenir hunter.

The flea market at Izmailovo in the east of the Russian capital has changed beyond recognition since its nervous beginnings in the dying days of the Soviet Union.

Some of the souvenir sellers who dipped their toes in the first wave of small business may now be among the new Russia's fabulously rich.

There were countless different wooden dolls - the faces of Russia's rulers and revolutionaries mixed in with the traditional designs.

There were icons -some reputedly stolen or swapped for vodka with Siberians who had no idea of the price they might fetch in Moscow.

I once even saw what looked like a complete space suit. There were fur hats for foreigners seeking something unmistakably Russian.

Most of the traders wanted dollars - but it was illegal for them to possess foreign currency. They would try to persuade their customers to conceal their greenbacks under a cover of Soviet roubles.

The USSR's banknotes bore the head of the revolutionary leader, Lenin. While he spent most of his life hatching plots, he would no doubt have been furious to have his image involved in this particular subterfuge.

Roubles - minus Lenin's head - have acquired real status

The range of wares on sale now is wider than ever. Anyone trying to pay in dollars today may also meet with a refusal. The rouble is on the rise. If you want to pay in any other currency, expect a lousy exchange rate.

The market itself has expanded massively. It even has its own wooden Kremlin, towering above the teeming alleys of stalls. The construction boom mirrors the one which continues to roar ahead in Moscow as a whole.

There are other parallels too - reflections of this city of contrasts.

Outside the gates there's another market. While tourists pass by in search of curios, Moscow's less well-off swarm here in search of shirts and shoes at bargain prices.

BARGAIN HUNTING

It's not the only place where the lives of visitors and Muscovites are close together and yet vastly different.

Moscow's soaring cost of living has hit many Russians hard

Moscow remains the world's most expensive city for expatriates, according to a survey conducted by the US-based human resources consultancy Mercer.

One of the reasons - as shoppers at Izmailovo have found out - is that the rouble has strengthened against the dollar.

Another is that rents have rocketed. The Moscow Times, the city's English-language daily newspaper, publishes a monthly property supplement.

Looking through it is rather like peering into the lives of the rich and famous in the pages of a celebrity magazine.

Many of the flats offered for expatriate executives - the people the Mercer survey is compiled for - cost more than $10,000 (£5,000) a month to rent.

This is a world most natives of Moscow just never come into contact with - unless they're lucky enough to be raking in $10,000 a month in rental income.

Accommodation costs aside, there are some items in the survey which have raised eyebrows among expatriates and Muscovites alike. There are plenty of places in this city where you can pay more than 154 roubles (£3) for a cup of coffee. That doesn't mean you have to.

One of the secrets of being an expat is understanding the culture you live in.

I doubt there is any city in the world where the phrase "if you have to ask the price, you can't afford it" rings as true as it does here.

Moscow's super-rich just pay up without even looking at the bill. If expatriate executives don't want to play that game, they should try shopping around.

That's not to say they'll always be successful. As I have mentioned previously, this is a city where you can pay £25 for a jar of marmalade.

SPY HUNTING

Russia's secret police - the FSB - say they're investigating the activities of British intelligence agents in Russia.

The case they've opened is based on remarks which Andrei Lugovoi - the man the British authorities want to try for the murder of ex-secret agent Alexander Litvinenko - made at a news conference in Moscow at the end of May.

Mr Lugovoi again denied that he was the killer. He made a string of allegations about the British secret services.

The FSB has apparently decided to take Mr Lugovoi's claims seriously.

So they're spy-hunting - and this raises the stakes.

The views of Moscow and London on the case continue to diverge.

It's only last year that the Russians claimed to have uncovered the "spy-rock". Then, relations between Britain and Russia were already less than rosy. All the same, none of the British diplomats supposedly involved was ever expelled.

Now Moscow and London are at odds over the political consequences of Alexander Litvinenko's death.

The Kremlin may be prepared to take a tougher line if the FSB's new investigation turns up any suspected spies.

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Your comments:

These reports always make me laugh. I've been living and working in Moscow for 5 years now, and while in some respects it is getting more expensive, it's not that bad! I have a much better standard of living here than I would in London. I live here with my Russian partner and daughter and there's no way we could live the same in the UK. Heinz ketchup may be very expensive but you can buy local products at a third of the price. Transport is cheap, petrol is cheap, beer is cheap. Businessmen probably dine in the finest hotel restaurants and get ripped off left right and centre. As for people who have to pay $5,000 a month in rent - my heart bleeds for you. If you're paying that much you probably earn a lot more than I do as a humble English teacher. Get real and stop moaning.
Phil Ernest, Moscow, Russia

I totaly agree with Mr Parker. It's far cheaper than any other European capitals. Being an expat you just need to undertake a minimum of research to find a reasonable price.
Pavel Efremenko, Moscow, Russia

When I lived in Moscow in 1992-93, I paid $100 for a two-room apartment and was able to feed myself on around eight dollars a week. For that, you had to pay ten roubles to buy a 15-kopeck piece. Telephone calls used to cost two kopecks. Then it was raised to fifteen kopecks, but the phones would accept only 15-kocpeck pieces, not a combination of 5 and 10-kopeck pieces. The 15-kopeck pieces soon disappeared from circulation and in order to make a phone call, you had to buy one from a kiosk or a street dealer. I assume the phone company people were reselling the contents of the phone boxes at a tidy profit.
Paul A Kachur, Bacharach, Germany

Re: "What you don't write in balance is the steadily growing middle class and the growing sense of optimism among the Russian people, with a resulting increase in personal wealth among an increasingly higher percentage of citizens." Alex Stone, Moscow Russia.
Have you travelled even a kilometer outside the center of Moscow? Have you seen the state of the provinces. The middle class is growing in Moscow only. Even St Petersburg has been left behind in comparison. Life may indeed be excellent for you. With your convenient EU citizenship, and your Western income.
Marcel, New York, NY

I lived in Moscow for 3 years until 2006 and even allowing for inflation, it is laughable to suggest that it is the most expensive city in the world. I rented a studio flat for $500 at the start of 2006 about 25 minutes from the centre - maybe now it would be $600. A flat of similar size and standard in a rundown part of Oxford would be more than £600, let alone dollars. You can easily get a beer for less than 50 roubles (£1) all over Moscow in the kruzhka bars - basic but clean and safe sports bars. In fact unless you frequent the most expensive, ostentatious city-centre restaurants, cafes, bars and supermarkets, I can't think of a single aspect of life there which is anywhere near as expensive as in the UK.
Tom Hadland, Oxford, UK

While Moscow is very expensive for businesspeople who want to enjoy some exotic new flavour for their jet setting duty-free lifestyle, it is more than affordable for people with low incomes. I have lived here for five years, and can still afford to do so. There are many other problems here, but they are the ones the BBC never talks about. I have yet to see good coverage of this place in the Western media.
David Riff, Moscow, Russia

Well I live in Moscow and I wouldn't say that life here is unreasonably expensive. It's a capital of a big country so what do you want? When I was studying in London I was spending much more( poor dad!). If you want to go to a cheaper place - there are plenty of small towns in Russia.
Maria, Moscow, Russia

James Rodgers' Moscow diary is unusually informative and helpful. When I read this diary, I feel I am walking along with him in that nostalgic city!
Promit Hossein, Dhaka, Bangladesh

I am one of those lucky expats able to pay the eye-watering rents extracted us for what the Russians refer to as "elite" apartments. Unfortunately, I am about to be subjected to the rather difficult process of "market adjustment". This involves the landlord demanding some outrageous increase - quite probably around 100% on the existing level - then the process evolves into a rather undignified haggle similar to those at Ismailovo market. Interestingly, the whole process takes place in dollars. If all goes well, I will find myself considerably less rich but still with a home. If negotiations are unsuccessful, I will find myself in a very expensive hotel, and back on the streets looking for alternative accommodation for myself and my family. Capitalism can be very harsh at times in the New Russia!
Tim Armstrong, Moscow, Russian Federation

It is true that in Moscow some places and most hotels will abuse you but as long as you don't want to go to the super-rich trendy places, your wallet will be fine. There are plenty of bars and restaurants where prices are still very reasonable - of course not all of them display English menus. Where in London can I sit in a nice beer garden in a beautiful park, and order a large beer for $2. Public transportation remains dirt cheap or you can pick car in the street. Hotel rates and executive apartments are ridiculous, but I have shopped around for a very nice flat at half price the hotel.
Jean-Louis Vergaert, London, UK

As an expat in Moscow for the last seven years I am totally inclined to agree. From an initial 1200 USD in 2000 my apartment (in the Taganskaya area of Moscow) has risen to a monthly 4000 USD, and the landlady may yet increase the price. We are living in la-la land.
Ed, Moscow, Russia

I'm a Briton living in the East of Moscow, and can say that life here is excellent. You'd have to frequent less than 1% of the capital's restaurants to get stitched up for the amounts you write, and that's true in London, Sydney and Paris as well, as I've discovered in my travels. What you don't write in balance is the steadily growing middle class and the growing sense of optimism among the Russian people, with a resulting increase in personal wealth among an increasingly higher percentage of citizens. You also omitted to mention that most of those cheap goods (which hinder the growth of the local manufacturers) come from the likes of Poland, and Moldova, who've frequently flaunted the regulations here through foreign and local intermediaries, just to flog their wares.
Alex Stone, Moscow Russia

Having lived in Moscow I've noticed the increase in the use of English words, although this isn't a specifically Russian phenomenon. I currently work in Poland, where words such as "biznes", "agencja PR" etc. are frequently used.
Sean Gibson, Warsaw, Poland

I spent six months in Moscow over the winter and it's very easy to live reasonably. There are loads of great underground bars and cafes springing up which don't cost the earth. If you want to live like a tacky oligarch then you can spend a fortune but Moscow is much cheaper than London if you just want to live well.
Frances Parker, London, UK