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The businessman, who had invited me to accompany him on his five-week foray through Russia, where he introduced me with deliberate vagueness as his associate, struggled back into his heavy coat and fur hat and pushed out the door into the frozen night. His shopping trip had only begun, and there were plenty of other bargains to be found.
The vital centers of Russia's military-industrial complex had long been hidden away in closed cities referred to only by code names -- Chelyabinsk-65 or Sverdlovsk-45 -- located far from Moscow, in the Urals or Siberia. Today the cities are no longer secret, but life there has changed for the worse. Scientists earn less than $100 a month, and political control remains in the hands of the military, the KGB and former Communist Party officials. As factory subsidies erode and payrolls shrink, thousands of Russia's most talented researchers and millions of factory workers are struggling just to survive. They have thrown open the doors on a backcountry yard sale, offering all comers bargains in everything from highly sophisticated conventional- weapons systems to rare and strategic metals. "This is a very worrisome problem," says U.S. Secretary of Defense William Perry. "The only good news I have is that it does not seem to be happening with nuclear weapons." (See box.)
Some of the sales are approved by the government. Others are extralegal but have been authorized by bureaucrats and politicians in Moscow expecting a piece of the profits. Still others are hatched locally and executed clandestinely by factory supervisors. In the scramble for hard currency, the line between government-approved transactions and private enterprise becomes difficult to discern, raising questions about the fate of Russia's arsenal of nuclear and conventional weaponry. The U.S. has found it hard enough to convert obsolete sectors of its own defense establishment to the production of consumer goods. In Russia, where military factories are rarely reliable sources of goods that can be sold for hard currency, the task is far more difficult. With a working free market years away, there is little to sell but raw materials and military technologies.
Foreign buyers of all sorts and sources come shopping. Some work for multinational corporations with an eye to cheap supplies. Others are front men for organized crime or outlaw regimes, part of a swelling tide of agents who haunt export harbors on the Baltic Sea and travel the countryside. For help, many turn to Russians skilled in the use of blat (personal connections) and vzyatki (bribes) to oil the gears of the postempire black market.
Many buyers look to current and former military and KGB officers, trapped in a system that can no longer afford to pay or house them adequately. At least one admiral has intentionally scuttled submarines in order to sell them for scrap. Ranking officers of the Russian fleet at Liepaja naval base in Latvia temporarily immobilized ships last year, when they sold the base's stores of fuel to international traders.