ALL CHANGE: Malls are springing up across Russia, like this in Yekaterinburg
But these days, here in provincial Russia, a three-hour drive from Moscow, something is stirring. The potholes on Lenin Street are as treacherous as ever, but over the past couple of years the dreary Soviet-era stores that once lined it have been snapped up and remodeled. Waitresses in red tartan aprons now dish out edible pizza for $1 a slice at Tashir's shiny new restaurant, which also offers wireless Internet access. Nearby are a sushi bar, a kitchen design store, a café that bears a passing resembling to Starbucks, a bright yellow mobile-phone kiosk that's open 24 hours a day and Jackpot, a slot-machine arcade that marks Kaluga's attempt at glamour. A South African company has renovated the town's brewery. "You can see people have more money," says Alexander Kuptsov, owner of Bellissimo, a shoe boutique that stocks a range of little-known Italian brands alongside a few famous ones like Valentino. In a good month, he sells 150 pairs.
With oil prices at over $70 bbl., Russia is awash in cash — and at least some of it is now trickling down to ordinary people in ordinary places. After seven consecutive years of robust economic growth — currently around 6% after inflation — growing numbers of Russians have money to spend. That makes for a remarkably different Russia from the $10 bbl. 1990s, when a handful of Moscow oligarchs worked their political connections to build vast fortunes at the expense of everyone else. There's still nothing egalitarian about the way Russia's new wealth is distributed; the rich are getting a lot richer, corruption is endemic and millions of people continue to struggle, especially the old and those in rural areas. But wages are rising fast, there's plenty of work available, particularly for young urbanites, and private companies are sprouting.
Victoria Grankina, a Moscow-based retail expert, reckons that about 30% of the population now lives "fairly comfortably" on a monthly income of about $1,000 for a family of four. Whether that makes them middle class in the Western sense is a matter of dispute. What's certain is that rising consumption is no longer limited to Moscow. National retail spending has doubled in the past three years and the strongest growth is now to be found in the Urals region and parts of Siberia, where it is leaping by more than 25% per year. The number of mobile phones has soared from 12 per 100 Russians in 2002 to 88 today. Sales of new foreign cars jumped 60% last year. Charter holidays to Turkey and Egypt are taking off, as are two financial novelties: consumer credit and home mortgages. Billboards plastered around Russia's big cities now vigorously tout them, alongside dvd players and fridges. Even the number of Russians living in misery is dropping: a World Bank study shows that the Russian poverty rate halved between 1999 and 2002. That still leaves 2 out of every 10 Russians living in poverty, but the number continues to decline.
Sergei Kuznetsov, 32, is one Russian in a hurry to live better. He used to sell sausage from a kiosk in Kaluga's open-air market, a tough business under any circumstances and particularly after Russia's 1998 financial crisis, when the government temporarily suspended debt repayments and devalued the ruble by 30%. But the economy recovered much faster and more strongly than anyone expected. Together with his wife and a friend, Kuznetsov scraped and borrowed to buy a crude packaging machine and set up a snack-food business. Sunflower seeds are his main product. He buys them in bulk from farmers in Rostov, 400 km away, roasts them, and then sells them in nearby towns through a small network of distributors. He recalls how in the early days he had to trudge through fields carrying bags of seeds to the building that housed his rented roaster because it wasn't accessible by road. Today, the Kuznetsov Seed Co. has annual revenues of about $1 million, and most of its upgraded equipment is in the cafeteria of a former school. Kuznetsov drives a silver Renault Scenic compact suv while his wife, who has stopped work to remodel their apartment, dodges the potholes in her new lime green Daewoo. Some 21 people work at the company these days, and he doubled their salaries in the past year, to about $300 per month, the Russian average. Now he's planning his next step: to buy land outside town to build a factory. Getting permits will require laborious and expensive tangling with the local bureaucracy, but Kuznetsov is not deterred. "You can never be optimistic about anything in our country because if you're optimistic it will end badly," he reflects. Still, his prosperity reflects the welcome economic stability in the country. And for that, he credits Vladimir Putin, the Russian President. "There is no alternative to him," he says. "Stability is important for business."