#21 - JRL 8305 - JRL Home
Moscow Times
July 28, 2004
70% of Russians Don't Bank
By Guy Faulconbridge
Staff Writer

After seeing their life savings wiped out numerous times since the fall of the Soviet Union, more than two-thirds of Russians do not have bank accounts, either because they do not trust banks or they do not have any money to deposit, pollsters said Tuesday.

A new study by the All-Russian Public Opinion Research Center, or VTsIOM, found that 70 percent of the adult population has not banked since before the 1998 financial crisis.

"I understand people who, at the smallest signal, form lines at cash machines and at the cashiers' windows,'' said Alexander Gafin, vice president of the country's largest private lender, Alfa Bank.

"People have been scared so many times by different cataclysms, and they are of course concerned about their own hard-earned money,'' Gafin said.

A lack of trust in banks is seen as one of the economy's biggest problems, making crises easier to provoke and preventing money from circulating around the economy.

Russia's banks this month faced their biggest crisis since the 1998 domestic debt default and ruble devaluation, as depositors rushed to withdraw their money from Alfa and other private domestic banks amid media reports that several were on the verge of failure. In May and June, lenders cut credit to each other amid reports that the government might shut down more banks after the Central Bank revoked the license of a mid-level bank for money laundering.

"According to our figures, people were starting to bring their money to banks, but after what happened this summer, that process has probably been reversed,'' Gafin said.

VTsIOM's findings are based on a poll of 1,600 people that was carried out across the country in March, May and July. The margin of error was of 3.4 percent.

Real incomes are rising and people are saving more, yet they are "not rushing to use institutional forms of financial activity,'' said Igor Zadorin, general director of the Tsirkon Research Group.

Zadorin said Russians' savings have been hammered 10 times over the past 15 years in various ways, including a government-ordered liberalization of prices as the Soviet Union crumbled and a variety of financial crises and pyramid schemes.

"Confidence in financial institutions has been disgraced by our history,'' Zadorin said.

"The population was cheated so much and so strongly over such a short period that, of course, it doesn't have much confidence in banks.''

When asked what they would do with their money if they had to make a decision, 35 percent of people polled, the biggest single group, said they would invest in real estate. The second-largest group, 27 percent, said they would put money in Sberbank, the country's state-owned savings bank.

The poll showed that 23 percent of people would buy hard currency, while 15 percent would leave their money in cash rubles. Only 2 percent of people would put their money in a private Russian bank.

"The leaders of our banking community should pay serious attention to the middle class because it is still very cautious,'' said VTsIOM research director Vladimir Petukhov.

Nearly half of people with monthly incomes above 5,000 rubles ($172) said hard currency would be their preferred investment, while 34 percent would buy real estate and 22 percent would open an account with a foreign bank.

-----------

What People Do With Their Cash*

Keep it at home** 38%

Buy real estate 35%

Put it in Sberbank 27%

Buy gold, jewelry, antiques 7%

Put it in a foreign bank 6%

Buy stocks 4%

Put it in a private Russian bank 2%

*13% of people declined to answer

**23% hold foreign currency, 15% hold rubles

Source: VTSIOM

*********

#22

RIA Novosti

WWI: PARIS SAVED AND ST. PETERSBURG LOST

MOSCOW. July 28. (Pyotr Romanov, RIA Novosti commentator)

Ninety years have passed since the start of World War I, but, no matter how remote that date may seem, the world continues to live in its shadow. This above all applies to Russia, as after the war the country went through two revolutions, a terrible civil war, a famine that claimed uncountable lives, and decades of Bolshevism. The incalculable human, intellectual, cultural and spiritual losses left no sphere untouched. If the losses from World War II are also taken into account, then one can only be surprised by Russians' unique ability to survive.

Unlike the other countries fighting in WWI, Russia took up arms without any clear idea why. The widespread supposition that the tsar wanted to clear the way to the Dardanelles is only partially correct.

The opposition, and not the imperial court, was far more interested in debating the Dardanelles. The latter entertained great doubts as to whether or not it had joined the right side in the war. The German and Austrian empires were far closer to it than the French and British democracies. But the liberal opposition in Russia saw a union with London and Paris as a guarantees that the tsarist regime would have to launch, one way or another, a constitutional reform along Western lines.

Even Nicolas II understood that the war was too much for the Russian Empire, which had not yet recovered from a defeat inflicted by the Japanese and from the social upheavals. Many figures in his entourage and his close associates constantly told him this. On the one hand, there were authoritative Russian politicians like Sergei Witte and Pyotr Stolypin and, on the other, there were his wife and Rasputin.

Pyotr Durnovo, former chief of the Police Department and Interior Minister, wrote in a memorandum to Nicholas II in February 1914: "The brunt of the war will doubtless fall to our lot, as Britain is hardly capable of playing a major role in a continental war and France, considering that immense losses will be suffered in this war in the present conditions and with modern military arms, will probably stick to strictly defensive tactics. We shall have to play the role of a battering ram breaking through the strongest part of German defence... A social revolution in a defeated country will become inevitable... Russia will then definitely be a most favourable area for social upheavals. It will be plunged into hopeless anarchy, the outcome of which is unpredictable." Nonetheless, even foreseeing its fate, Russia became involved in the war under pressure from its allies in the Entente, and its own Slavophiles and pro-Western liberals.

From the very start, the plan of military operations, as devised by the Russian General Staff, had to be changed to help France. Under the plan, Russia was to fight against Austria, and only after it had concentrated all its land forces launch an offensive against Germany. In reality, the Russian army was forced to start its offensive in Eastern Prussia immediately, i.e., when it still had not been mobilised. Colonel Alfred Knox, the British military attache, admitted that Russia's strategic plan had been changed for a sole purpose: to help the Allies in the West.

Even the very first unprepared offensive, which made it possible to save France from a quick defeat, inflicted great casualties on the Russians and undermined the far from immense forces of the tsarist army. Recalling those days, the daughter of Sir George Buchanan, the British ambassador to Russia, wrote, in particular, that it seemed there was not a single family in Petrograd that had not suffered bereavement. Funeral processions slowly made their way from all railway stations.

Such was the price paid by the Russians for saving Paris. Later, at critical moments, the Allies repeatedly turned to St Petersburg for help, and Russia met France and Britain halfway.

The Russians remained on the battlefield until the Bolsheviks, the most zealous defeatists, seized power. Lenin associated his greatest hopes with that war. The task seemed obvious enough - to turn angered armed men against the authorities. He wrote openly in one of his instructions: "Only the development of this war can lead us to power, but we should say little about it in our campaigning."

The year 1917 was one of revolution instead of war for the totally exhausted Russian soldiers. Spring saw the first, bourgeois, revolution, and autumn the second, proletarian, one. Russia's total losses in that war were as follows: 1.7 million dead and nearly five million left crippled and wounded. The masses could not forgive the long-bankrupt ruling class for these losses.

As the police chief Durnovo and the revolutionary Lenin had foreseen, the "angry man" finally left the trenches and made for the capital.