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This time… Bobbing and weaving in the anarchic gold-rush: the New Russia staggers to its feet. Goodbye central planning: profit is King… and: pointing the finger when the lights are out.
Having become “official” in 1989, Neil’s company would see the Soviet system’s extended nose-dive finally arc into the ground; the fall of the Berlin wall; the tottering rebirth of the new Russia; and, with it all, the opening of the floodgates for commercial and tourist travel to and from the former Soviet Union. Over to Neil:
“Although the wall fell in ‘89, it wasn’t till two years later that the Soviet Union disintegrated. Things went into an anarchic state. ‘Anarchy’ was the right word for it. The Soviet Union actually fell to pieces in 1991. We started the current company in 1994, but I had been involved in a different company before that.”
So this whole state-of-flux reached the core of Neil’s endeavours too. Nothing was safe; everything was subject to change, and adaptation was the key to survival. So how would he define the survival strategy throughout this period?
“Bobbing and weaving is the probably the way you’d look at it, although it didn’t feel like that at the time. We kept hoping for some new form of stability in the business environment, but it never really came along. We were nevertheless hoping and planning for it. So each time a new Prime Minister was announced, we would think, ‘Well, things might pan out a little more stable than last time.’ But of course they never did. It was mostly a question of trying to keep going, not knowing quite what was going to happen in Russia at any moment.”
I’m curious about the kind of madness going on at ground level throughout this period. “Hotels, for example, would come and go. Because of central planning, the Soviet building of hotels wasn’t done on the basis of need or requirements. It was more like somebody decided that there ought to be some. There was almost no availability of office or shop space during the Soviet period. So when the house of cards came tumbling down, many of the hotels found it actually more profitable to close as hotels. They retained their hotel legal structure, but they were letting out their rooms – especially their suites – as office suites rather than as places to stay. So a lot of those hotels began to disappear from the market. Then similarly, people who had the bright idea that they could open a hotel began doing so, especially larger, Western corporations who had been looking to get into the Soviet Union for ages. They could see that there was going to be a good market. They were opening, the old Soviet hotels were closing. Every day you woke up and the pattern of hotels was slightly different to what it had been the day before.” A nightmare? “Well it was potentially, although it was actually less anarchic than it sounds from that description. It was continuously evolving. There were no nasty surprises, or not very often anyway! But you couldn’t rely, for example, on this year’s hotel being open next year. It might turn out to be an office suite or converted into shops, or knocked down to make way for something else.”
Was there a gold-rush element to this? “Yeah, that’s a fair description in retrospect, yes. They were moving from a system where nothing had to pay for itself to a system where everything had to pay for itself – and sometimes in a very short-sighted kind of way. If it didn’t make money it was knocked down. Also, state support for things which didn’t necessarily make a profit, but were nevertheless desirable or useful, was often not available when it should have been. So proper, worthy organisations – museums etc. – would sometimes close down because there was no money for them. One of the palaces outside St Petersburg, one of the greatest attractions, closed for a month because nobody had paid its electricity bill and nobody could work out whose responsibility it was.”
So rather than the state taking care of things, suddenly there was a lot of finger pointing about whose responsibility things were? “Absolutely, that’s exactly the situation. It had never occurred to them: the electricity bill for a museum would always be paid – why wouldn’t it be? It wasn’t because nobody wanted to pay it or even because the amount of money was very much, but because the organisation which was supposed to have done it no longer existed – and then suddenly the bill hadn’t been paid, so the electricity was cut off. A couple of weeks later somebody realised it had all been a terrible mistake and it looked very bad, and somebody paid. But it was that readjustment period, moving from the state paying for everything to things paying for themselves.”
It sounds like they had the carpet swept from beneath their feet? “Yes, that’s absolutely true. Also, some organisations which had been chafing at the bit to shed themselves of their state structure and start becoming profit-making enterprises were able to… Well, some people were making a huge amount of money. Other organisations were making massive losses.”
“Another example: medicine. Although it seems mad now, medicine had always been seen in Russia as an enormous loss-maker that they’d like to get rid of. So the situation in hospitals and in medical care after the end of the Soviet Union plummeted drastically. It was only really after a year or two that people realised, “We could charge money for this!” and there was a growth in private clinics. Hospitals began to de-register themselves from the state apparatus and set up as private hospitals. But this all took time. Nobody really had a business plan ready for all of this because nobody expected it to happen. So there was quite a lot of anarchy.” That word again…
Next time: Calling Moscow (Part 7)
Hope turns to ash: citizens depart, gangsters arrive. Disposable premiers. The party is over and: the certainty of uncertainty.Also: A Tale of Two (Russian) Cities
Video of Neil McGowan discussing the pros and cons of Moscow and St Petersburg.
[Photo by Andreas Thies]
