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FINANCIAL CRISIS: RUBLES FLOW IN RUSSIA

Rubles flow at luxury shops

The economic mess doesn't faze rich Russians, who believe that they'll 'always be in the money.'

October 12, 2008|Megan K. Stack | Times Staff Writer

MOSCOW — Money or no money, Eduard Strizhev wanted his Porsche.

Stocks were collapsing downtown; the airwaves groaned with grim economic news; Russian finances teetered on the back of slumping oil prices and a global credit crunch. But why dwell on dreariness? Strizhev and his wife strolled serenely over the polished floors of the Porsche showroom, signed a few papers and drove off in their brand new Cayenne.

Sure, Strizhev's accounting firm drew fewer clients this month. He was starting to think he shouldn't have bought his home with a mortgage -- that wasn't much of a deal he got from the bank. And, true, he already owned a year-and-a-half-old Cayenne.

But Strizhev would rather discuss the custom paint job on his new ride. See how it looks black in the shade? And how, when the sun strikes the hood, you can see the olive green undertones? Strizhev grinned, and dismissed the economy with a shrug.

"On the whole, we don't feel the strength of this crisis," he said, and climbed into the posh cavern of the car. "We're just not feeling the strain so far."

Call it denial, call it bravado. Ignoring a drumbeat of dismal financial tidings, some Muscovites continue to blow their rubles and petrodollars with aplomb, spending with the trademark abandon that's turned this oil and gas boomtown into a notorious hub of opulence and hedonism.

From the Ritz-Carlton hotel to the luxury boutiques of Red Square, consumers and salespeople alike last week shrugged off fears of a crisis. Tomorrow will take care of itself. As long as there's cash in hand, Russians will go ahead and buy.

"Not every crisis will bring us down," said Oleg Uvarin, an interior designer who charges wealthy clientele upward of $800 a square foot. "Through history, rich Russians have always lived lavishly. Russia will always be in the money."

It was a cold, bleak day in the Russian capital, and Uvarin strolled the GUM shopping arcades. Icy autumn rain drilled through the towering glass ceiling and dripped into puddles on the floor. Charwomen shoved mops fruitlessly; women stepped around the water, indifferent in towering heels.

A massive hulk of commerce perched across the way from Lenin's tomb, GUM was the storied, grim epicenter of Soviet shopping. Today, its halls brim with luxury goods from around the world, clothes and jewelry and cosmetics.

A 25-year-old model named Tatyana Zelenskaya stalked the shops in leggings and cashmere, blond hair swirling around her shoulders. "Of course I'm worried -- my husband's company has lost 60% of its value," she said. In that case, doesn't her husband, a coal executive, ask her to curb her spending? She threw back her head and roared a belly laugh toward the ceiling.

"He can't say that to me," she snorted. "Not to me." She disappeared into Moschino.

In Louis Vuitton, salesclerk Bota Skakova shrugged and smiled impishly when asked about the global worries. Nothing's changed, she said. A customer recently bought a single piece of custom-made luggage for $69,000. "They're already getting ready for Christmas shopping," Skakova said. "Asking us what new, fancy things we will have for presents."

All of this plays out against a backdrop of growing fears about Russian economic strength. The stock markets have lost about 65% of their value since May. Oil prices have stumbled back down into the double digits, and buyers for Russia's other bountiful natural resources are drying up. Credit is tied up, oligarchs are selling off assets, and behemoth oil companies have been reduced to hitting up the government for cash.

But in the lobby of the Ritz-Carlton, business deals were drifting in tea steam and piano chords. Alexander Voloshin, once known as one of the Kremlin's political masterminds, drifted down the stairs and stood chatting in the lobby.

Over by the restaurant, one of the hotel's $35,000 bottles of Champagne gleamed behind glass. The Champagne had been bound for Czar Nicholas II in 1916 when the ship carrying it across the Baltic Sea sank. The bottles were salvaged after eight decades underwater; the Ritz-Carlton has 10 of them.

The hotel estimates that Muscovites make up half the clientele who plunk down at least $1,000 for a room, or nearly $1,500 a head for the "czar's breakfast" of beluga caviar, Cristal Champagne and other delicacies.

"I haven't noticed any decline in spending," said Sergei Logvinov, the hotel's director of public relations.

"There's something unique about Russian life: You enjoy today as much as you can and don't think about tomorrow," he said. "It's difficult to talk about pessimism or optimism in Russia. It's both at the same time."

No matter what happens, few people here believe it can be any worse than what the average adult has already endured. People here have weathered the collapse of communism and the crushing ruble crisis of 1998. They earned it back big, and then some.

In the Porsche showroom, the salesman said that customers had thinned out a bit. But still, they are coming.

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