There are no oil wells in Kaluga, no gold mines, no rich mineral deposits. In fact, until recently there was very little in this town (pop. 345,000) other than some run-down farms, a distillery that produces mediocre vodka, a big statue of a Soviet rocket-science pioneer and a war-era T-34 tank monument that still bears the inscription FOR STALIN AND THE MOTHERLAND.
But something is stirring here in provincial Russia, a three-hour drive from Moscow. 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 resemblance 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. "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, far more than he did just a couple of years ago.
With oil prices now more than $70 per bbl., Russia is awash in cash--and more of it is trickling down to ordinary people in ordinary places. Seven consecutive years of robust growth--currently about 6% a year after inflation--have transformed the country, giving birth to a consumer class and bringing signs of prosperity to the long-suffering hinterland. Although the distribution of wealth is far from egalitarian--the rich are getting a lot richer, corruption is endemic, and millions continue to struggle--the good life is in reach for more Russians than ever before. Victoria Grankina, a Moscow-based retail expert, estimates that 30% of the population lives "fairly comfortably" on monthly incomes averaging $1,000 for a family of four. The number of mobile phones has soared from 12 for every 100 Russians in 2002 to 88 today. Sales of new foreign cars jumped 60% last year. The poverty rate dropped from 41% to 20% from 1999 to 2002, according to the World Bank, and other studies suggest it is now even lower.
President Vladimir Putin is reaping the benefit of the soaring economy. His approval rating is a rock-solid 70%. That support has allowed Putin to brush off his critics in the West, where the Russian President is often painted as a throwback to autocracy. The Kremlin has tightened its grip on society in recent years, cracked down on nongovernmental organizations and maneuvered to take control of natural resources and other industries it deems strategic. The Bush Administration, which has grown uneasy about Russian assertiveness beyond its borders, issued an unusually harsh indictment last week when Vice President Dick Cheney said Russia has "unfairly and improperly restricted the rights of her people" and warned Moscow against trying to meddle in the affairs of neighboring countries.