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Scenes from Russia's ruble crisis

Back on the street, most stores and restaurants had stopped taking credit cards. Russian banks have frozen all hard currency accounts and continue to stall Russians who want to withdraw their ruble savings.

Many Russians at the exchanges never even use banks anymore. Marina Votiyeva, a 35-year-old single mother and casting director at MossFilms, Russia's largest studio, changed 1.9 million rubles on Sunday. She keeps her monthly salary of $1000 at home, and, like many Russians, she now saves practically nothing. "I haven't used a bank since 1994," she said. That's when she lost her savings—$3000. (Her father lost his savings in the current crisis.)

Even so, Votiyeva remains optimistic that Russia's fortunes will improve. "Maybe it's just my nature to think this way," she said.

However, she added: "I'm afraid for my little son. If people lose everything and can't buy bread, there could be riots. I hope not, but it's possible."

Foreigners working in Moscow and tourists were left without any cash at all. Most ATMs had been shut down and banks refused to accept wire transfers. "No one has been able to get money anywhere," said Monique Couture, a lawyer with the Canadian law firm of Gowling, Strathy, and Henderson. "I'm going home at the end of the month and I'm thinking of bringing enough cash to last until November [her next trip home]."

On Saturday morning, the Starlite Diner, a favorite expat brunch spot, was packed, even though the rubles-only, no­credit card sign caught some people by surprise. Diners were glued to the Moscow Times, a free English-language newspaper, and words like "crisis" and "ruble" and "business deal collapse" hovered over the servings of malted milks, Dunkin' Donuts, and greasy burgers.

David Quinn, an American lawyer who has launched his own venture capital firm, and Michael Malloy, a lawyer with Arthur Andersen, were almost gleeful.

"Where there's crisis, there's opportunity," said Malloy, over a brunch of cheese fries and nachos.

"None of my investors are pulling out," added Quinn.

In just one week, Moscow has spiraled back to the instability of 1991. This time, though, the slate is not clean. The euphoria that came with the collapse of Communism is over. The West is now disillusioned with Russia, which is seen to have brought the crisis on with its lawlessness and limitless capacity for greed and corruption. The Russians themselves no longer have faith in their leaders or democracy. Nor do they continue to believe that after the suffering comes the euphoria of capitalism. Still, capitalism has brought conveniences—and private property—that will be difficult, if not impossible, to give up.

The Road to Ruin

While no one could have predicted when the Russian debacle would happen, it was nevertheless inevitable. The current crisis began to build in March, when Yeltsin—in a surprise move—sacked his entire cabinet. At the same time, unpaid miners, whose strikes were instrumental in building popular support for Yeltsin before the collapse of Communism, began to step up their strikes against him. By August, the International Monetary Fund's $22 billion bailout package was in place, but it was unclear how the money was spent.

Events sped up on August 13, when New York-based speculator George Soros declared that Moscow should devalue the ruble. On August 14, Yeltsin said there would be no devaluation.

But on August 17, Moscow floated the ruble, effectively devaluing it. Moscow also called for a 90-day moratorium on repayment of some foreign debts and announced a restructuring of the ruble-based debt. The Russian media dubbed it the devaluation of the president.

On August 21, the parliament called for Yeltsin to resign. Two days later, Yeltsin sacked his 36-year-old prime minister, Sergei Kiriyenko, and named Viktor Chernomyrdin as acting prime minister.

Chernomyrdin is a favorite of the corrupt elite. And Kiriyenko was not. In his five months on the job, the previously obscure oil and energy minister had challenged the so-called oligarchs, the businessmen who own Russia's top post-Communist industries, natural resources, banks, and media. Those moguls had claimed responsibility for Yeltsin's reelection in 1996, but Kiriyenko demanded that their companies pay taxes. Among his targests was Gazprom, Russia's natural gas monopoly, which Chernomyrdin himself had headed during perestroika days. —J.G.

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