ALL CHANGE: Malls are springing up across Russia, like this in Yekaterinburg
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Some of that apprehension spills over into concerns about the integrity of the Russian economy. Payoffs are the norm if you need any sort of official permit. Andrei Milekhin, who runs Russia's biggest polling organization, Romir Monitoring, reckons that public officials who line their own pockets make up a significant portion of the new middle class. And it's not just Russians who are expected to pay: IKEA ran into a wall of trouble in Moscow because it refused to give kickbacks to city officials. It finally managed to open its two stores there after it made a big public fuss. Yet Derk Sauer, for one, is convinced something significant has changed in Russia. He's a Dutchman who started a magazine business in Moscow during Soviet times, and built it into Russia's biggest media company. Among the dozens of titles he now publishes is Russian Cosmopolitan, which has doubled its circulation to 1 million in just 18 months. He used to pay his staff in dollars, but in March he switched to rubles — because the staff asked him to. "Putin gave the Russians back their self-confidence," he says.
That's not to say Russians are giving up their legendary pessimism. Milekhin says his polls suggest that most people don't feel better off even if they are consuming more. Everyone grumbles about inflation, currently about 12%. Apartment prices are soaring faster than in Shanghai or New York City. Yet the favorite political noun of the moment is the one used by seed roaster Kuznetsov: stability. For all its dramas and uncertainties, the Putin era seems less erratic than the last decade, starting with the collapse of the Soviet Union in 1991 and finishing with the Yeltsin-era 1998 crisis that wiped out most people's savings. Oil may be powering economic growth, but Putin is reaping the benefit of it. "He's our Teflon President," says Milekhin, pointing to a chart that shows how even potentially damaging events such as the Beslan school hostage crisis in 2004 haven't dented Putin's popularity.
Those most optimistic about the future are the people too young to remember Soviet times. Valentina Zagrebelnaya, 25, is part of that generation. She treads carefully as she crosses Lenin Street so as not to get mud on her spike-heeled ankle boots. She runs the Kaluga branch of KMB bank, which specializes in giving small loans to entrepreneurs. The Kuznetsov Seed Co. is by far her biggest client. She was 21 when she opened the bank branch, a graduate fresh from the local arts college with no financial experience. No matter: in the first couple of years there were almost no takers. Now, though, she's busy. Last year there were about 70 startups in Kaluga. The KMB Kaluga branch's loan portfolio swelled over the past year from $600,000 to $2 million, and the number of clients has doubled. "A lot of people want to open shops," she says.
And if the scene is that vibrant in a backwater, head to any of the dozen big cities in Russia and the signs of new prosperity are even more striking. Yekaterinburg in the Urals (pop. 1.3 million) is one example. It's best known as the place where the Bolshevik revolutionaries shot the last Czar and his family in 1918. In Soviet times, it was an industrial center specializing in heavy machinery, including for military industries. But in the early 1990s, local factories ran out of money and rival mafia gangs battled for control of parts of town. A row of ornately decorated graves in Shirokorechenskoye cemetery is the legacy, including one with a life-size portrait engraved on a marble slab that shows the mobster in a sharp suit, casually dangling the keys of his Mercedes.