This past weekend, I visited Moscow for the first time in about a decade. It gave me an opportunity to compare the city to a time when I visited Moscow regularly during the stock market boom years between 1996 and 1998. At that time, I had almost taken a job in Moscow, lured by ultimately unfulfilled promises of a seven-figure annual income.
Moscow has a reputation as a rough-and-tumble place. One friend and later lawyer colleague from Harvard Law School pressed his luck so far in his Russian business dealings that he was knocked off by the Russian mafia last year. The Russian government is now trying to extradite shareholder activists like Hermitage Capital founder Bill Browder -- even after ransacking Hermitage's offices. This weekend, I stayed in a building next to the one where activist journalist and Kremlin critic Anna Politkovskaya was murdered on the street, in broad daylight, just three years ago.
Objective: Moscow!: Initial Impressions
Moscow is a city that impresses. Before the global financial crisis, Moscow boasted more billionaires than New York or London. Even today, Moscow is the most expensive city in the world. Driven in from Domodedovo, Moscow's shiny new airport, I saw that Moscow remains architecturally challenged with vast swathes of Communist-style apartment blocks dotting its suburbs. That said, it's no worse than the taxi ride from JFK airport to Manhattan. The traffic-choked, two-hour drive into the center of the city also reminded me of the city's scale. For an American, most of Europe seems slightly cramped. But in Moscow, the boulevards are wider, the buildings are taller, and the horizons are farther than anywhere else in the densely populated continent.
In contrast to some Eastern European capitals like Budapest, the buildings along the major thoroughfares in Moscow are almost completely graffiti-free. The street that leads visiting foreign dignitaries to the Kremlin is particularly squeaky clean. Russians work hard to impress foreign visitors, and are famous for "Potemkin villages" -- hollow facades of villages erected at the direction of Russian minister Grigory Potemkin to fool Empress Catherine II during her visit to Crimea in 1787. Scratch the surface and you may get a different story. I was amused to hear that the underpasses below the streets have to be reinforced with lumber girders to keep them from crumbling under the weight of Russian tanks and missile launchers during the spectacular annual May Day parades.
Red Square itself is spotless, all activity monitored closely by security guards discretely milling about the crowds. If every move you make in London is monitored by cameras (as an average Londoner, I am photographed 300 times a day), in Moscow the seen and unseen weight of state authority keeps its remarkably thin citizens from getting too much out of line. During my time there, I saw only a single person sleeping in the streets -- in stark contrast with my recent visit to downtown San Francisco, which teems with the homeless.
The famous GUM department store -- which was a ramshackle collection of state-owned shops and ice cream parlors a decade ago -- has been stunningly restored and is now home to flagship luxury brands like Prada, Louis Vuitton and DeBeers. A newish collection of skyscrapers now dominates the skyline of Moscow, a part of the city that aspires to be a mini-Manhattan or Canary Wharf in London.
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Moscow 's business culture is all about boom and bust. The global financial crisis has hit some parts of Moscow hard, though others barely acknowledge its existence. Virtually all real estate construction projects have been left standing unfinished. The Millionaire Fair this year was muted compared to its previous extravagance. Expatriate life is an unending story of projects going bankrupt; salaries halved; and dreams of quick fortunes being dashed.
Paradoxically, they wouldn't have it any other way. I spoke with one fund manager investing in Russian stocks who lost 90% of his assets over the past year. When I asked him why he just didn't cut his losses -- a standard strategy for anyone working in developed capital markets -- I was quickly dismissed as an overeducated, financial wussy. Everyone who puts money into Russia knows you can lose everything, I was told. In Russia, you gotta take your losses like a man.
And while the Western press focuses on the opportunities in China and India, the expats I met are convinced that Russia has a great future. And this includes those who have worked in places like Shanghai. The biggest surprise? While the Western media strives to define Russia's relationship to the West in purely political terms, I was told most Russian business people ignore politics. They are simply out to get rich.
Objective: Moscow!: "The City of the Id."
Sigmund Freud spoke of the "Id" as:
"the dark, inaccessible part of our personality... we call it a chaos, a cauldron full of seething excitations... It is filled with energy reaching it from the instincts, but it has no organisation, produces no collective will, but only a striving to bring about the satisfaction of the instinctual needs subject to the observance of the pleasure principle."
The Id is a perfect metaphor for Moscow by night. You'd be hard pressed to find a city that gives better opportunity for expression to man's (and woman's) basic instincts. Russians must smile when Americans describe Las Vegas as " Sin City." If Moscow is the New York Yankees of sin cities, Las Vegas barely plays in the major leagues. Las Vegas is sanitized, homogenized, and pre-packaged "fun." Moscow is rude, rough and relentless.
Like a hormone-driven teenager, Moscow at night is anxious to flash the cash. Moscow nightlife is sophisticated yet boorish, seductive yet repulsive, beautiful but butt-ugly. You've got to be extremely good-looking ("face control") to access the top clubs, like Soho Rooms. Money is the measure of all things. A $200,000 watch trumps a $200,000 education any day. Annoyingly, a growing number of Russians have both. No wonder expats dive into Moscow life with a self-destructive fervor. The endless supply of savvy Slavic beauties dissolves expat marriages quicker than Alka-Seltzer dissolves in soda water.
Wall Street tells you it's the beginning of a new bull market and stocks look great. Don't believe it. The next shockwave is about to hit. Meanwhile, the government is taking money from you to bail out companies "too big to fail." What does that mean to your wealth? And how can you save yourself?
There are moments when you are in Moscow, you never want to leave. But once you do, you may not trust yourself enough to ever go back.
Nicholas A. Vardy Editor, The Global Guru
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