Five Rubles to the Dollar

Elena Kanga, The Exchange Rate on Moscow’s Black Market. October 16, 1988

Written with Leonid Miloslavskii and Aleksandr Kabakov

Original Source: Moscow News, 16 October 16 1988.

The militia confiscated 130,000 dollars from black-marketeers and detained 5,881 persons for illegally trading with foreigners all in the first half of 1988. Though these detainees paid a total of 185,000rubles in fines to the state, this illegal business keeps expanding.

Our Zhiguli and a tourist bus drew up to the Maurice Thorez Embankment almost simultaneously. The special Moscow militia unit which had organized our “excursion” to the busiest points for “fartsovka” (illegal trading for foreigners) parked round the corner. “We’re too well known around here,” the militiamen explained. “We’re even on a first-name basis with some of these guys ” As for us, disguised in jeans and animated tourist-like expressions of expectation, we melted into the crowd pouring out of the bus.

While the tourists snapped pictures of the Kremlin across the Moskva river, we also pretended to be enraptured by the cityscape. Then three young men cropped up out of nowhere. One approached a gray-haired lady and whispered something. He dived into his bag, the lady into hers. Our “guide” suddenly appeared at our side.

Aleksandr Khalfin, of Moscow’s special militia unit: “See that one, in the gray pullover? He’s trying to make a deal. He’s not a big-time ‘fartsovshchik’: I don’t even know him. He’ll offer a badge, a matreshka doll, and if these tourists were Americans, he’d offer our state flag or something from a military uniform. In return, he’ll take anything-from chewing gum to clothes to dollars. No big deal? just wait … ”

Exactly what is “fartsovka”? There’s probably no foreign equivalent It is based on the high prestige of anything foreign-from a fountain pen to a car. And on the fact that the official exchange rate for the ruble doesn’t coincide with realities in the world of commodity-money relations. For many of us “fartsovka” is just a worthless hobby for dumb teenagers who needle foreigners for worn-out jeans or plastic bags. How far that clich» is from reality becomes clear when one remembers the case of Rokotov and Faibishenko, large-scale currency dealers, thirty years ago. Since then cases of this kind have become routine in our courts, though not on so grand a scale. Anton D., a minor, was tried by the People’s Court of Moscow’s Kiev District on October 5. He was accused of buying 50 dollars from Italian tourist V. Sardi for 200 rubles which his grandmother had given him. Anton said he wanted to buy jeans, and 50 dollars was what he needed to do that. Anton’s mother, his legal representative, wept; she couldn’t understand what sort of pants one would pay 200rubles for and what sort of dollars those were which, at the official exchange rate, cost a bit over 29rubles…. The prosecutor asked that the defendant, who pleaded guilty and fully repented, be punished but not deprived of his freedom.

The fellow in the gray pullover glanced over his shoulder and immediately moved away from the lady he’d been talking to. Could our appearance have made him suspect something or was he just being cautious? The tourists continued clicking their cameras, we continued admiring the view, the cautious young men continued to stare thoughtfully at the river. Altogether it looked like some children’s game. It was, however, neither a game nor childish mischief.

Aleksandr Khalfin: “Just like any market, the black market is not adverse to small change, to kopeks and they add up to thousands of rubles. What makes it so hard to fight ‘fartsovka’ is our lack of efficient legal levers. What can we do? Note the ‘badgering of foreigners for purposes of trading.’ Under the Decree, the first-offense fine is 100rubles, for a second offense it’s 200. But first we have to prove the ‘badgering’ and the tourist must confirm it. The guy usually says he was just talking about unemployment in the tourist’s country, while the tourist hurries away. At best we manage the purely symbolic punishment of very small fry. Though we are completely convinced that behind this small fry is a well-organized large-scale operation. We estimate the worth of one 17-year-old ‘fartsovshchik’ at 17,000rubles! But I can’t give you his name- until we’ve caught him red-handed he’s not a ‘fartsovshchik,

Not far from the observation platform on Lenin Hills, we talked to a fashionable-looking blond fellow. One of the men accompanying us spied him among the people crowding the platform and beckoned to him. He wandered over to us and nodded at the man: “Hi, Sergey Ivanovich In the same free and easy manner he agreed to talk to us-as long as we didn’t use his name.

N., 19, a professional “fartsovshchik” (unemployed):

“I’ll tell it to you straight-you’ll never be able to put an end to this. I’ll pay any fine, I can ‘earn’ it in one day. I’m already something like a reckless gambler. It’s like a disease. See what I mean? Today 200, tomorrow 300 … I’ve been doing this for four years and don’t regret anything. Risk? Of course there’s risk, but not much. My future? Someday I’ll marry-probably a foreigner, and not a poor one, you can be sure of that … ”

We asked how often foreigners refused to deal with him or his colleagues. He smiled: “Maybe one in five ” There are no barriers between the “fartsovshchiks” and their partners-neither linguistic nor ethical barriers-while the dollar stretches both ways, from here to somewhere beyond our borders. In the self-styled “bank” that roams from the hotel to the observation platform, from the museum in Kolomenskoe to Red Square, the “fartsovshchiks” give foreigners five rubles to the dollar. Middlemen pay the small fry seven rubles to the dollar, then resell those dollars for 10rubles apiece to other foreign visitors, for some of whom buying and selling currency is the principal purpose of their frequent visits to the USSR.

Aleksandr Khalfin: “The main thing is the law. And the law is so flawed it tempts more and more violators. Thus my doubt strange, as it may seem, whether such a law is necessary. Should the punishment be harsher? I’m sure that wouldn’t help. Should it be less harsh? That’s absurd. Now kids are brought to me whom we’d overlooked five or ten years ago because of the shortage of jeans and chewing gum. In five years I’ll be seeing the kids we’re overlooking now because of a shortage of common sense. In the meantime the bigwigs, the bosses who pocket thousands of dollars, remain out of sight-as do their foreign partners who, as a rule, are not tried.”

By the Bolshoi Theatre life was bustling. In between the famous columns, where we’re so used to hunting for extra tickets, the same fashionable-looking young men are offering those tickets to foreigners for ten and twenty dollars. Where on earth does that, say, young fellow in the green shirt get these tickets, which ordinary mortals can never get? The system functions. It has its executives in every link, while the militia manages, with really great difficulty, to get its hands on the very tip of this dollar iceberg

One of the recent big-time cases involved a gang in Leningrad. I. Kogan, a senior research associate at one of the city’s scientific institutes, and A. Semenov, a chief porter at the Pulkovskaia Hotel, sold paintings to Finnish tourists for markkas. They even sold a painting by Aivazovskii. Their receipts were 2,000 marks, 4,000…. But even that case doesn’t show the true scope. The Finns, of course, were never brought to trial….

Now that we’re restructuring our legal system, it might be worthwhile putting some hard-and-fast rules in place of the ineffective prohibitions. Why not set up special shops that would take on commission or simply purchase all sorts of things from foreigners? These shops could be state-owned or cooperative and they’d be profitable both for our society and for a foreigner who wants to make a little money on an extra pair of pants.

Much more serious, however, is another question-what is the real exchange rate of the dollar? The black-market rate or the official one? It seems to me it’s the real market rate. So shouldn’t the rate offered in the state exchange bureaus be as near as possible to that one? No matter how one tries, one can’t fool life….

Source: Jonathan Eisen, ed., Glasnost Reader (New York: New American Library, 1990), pp. 51-57.

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