Russia Project Part 1

Released in December 2001, “Russia: Ten Years After the Soviet Collapse” marked the tenth anniversary of the collapse of the Soviet Union. Producer Reese Erlich visits with ordinary citizens and host Walter Cronkite reminisces about his years as a foreign correspondent in Moscow.

The Free Spirit

REESE ERLICH: Bouncy, effervescent, twenty-two year-old Anna Berkut was our translator. She remembers the late 1980s as the best years of her life. She and her family enjoyed relative economic security and Soviet leader, Mikhail Gorbachev was allowing unprecedented freedoms. Our group visited Georgia, one of the Soviet republics in the Caucasian mountain range. Anna fondly recalls the hospitality of the Georgians and their fierce independence.

ANNA BERKUT: In those days, Caucasian republics, they had their own type of communism because their traditions were very strong and that is why even the Soviet power couldn’t ruin them. This tradition of co-hosting says that we went from place to place and they were feeding and feeding and feeding and feeding us.

[HOME OF HOSTS – UNKNOWN SPEAKER] Thank you for this incredible Georgian food and to the incredible kindness of our hosts.

The table is very interesting because it has several floors, several levels, of food. Because there is no place for us, for new food arriving.



Chicken? No, this is not chicken, no. This is katamir.

Chicken or chicken? Chicken. Chicken. “Chinin” [LAUGHTER] [IMITATION OF CHICKEN CLUCKING] Bach, bach, bach, bach. Oh chicken, okay. But Georgian chicken! [LAUGHTER CONTINUES]

ERLICH: Anna admired the strong sense of Georgian identity but such sentiment also laid the basis for fervent nationalism that split apart the old USSR and keeps Russia at war even today. Like most Russians, Anna longs for the relative ethnic peace that existed before 1991. The Gorbachev years also meant economic stability for Anna and her family. She was optimistic and free spirited.

BERKUT: In terms of social welfare I had no worries. I was absolutely sure that we would not die from hunger. Of course I was optimistic because even, it was just shortly after Perestroika we had the lines and so on and so forth but, first of all, I was not afraid [of] any hardships. You know I felt good when I overcame something, so that is why, why I’m simply not afraid. You know I was absolutely optimistic. I was absolutely sure that everything would be okay because for that time, for example, my parents, and even my grandparents, we were not rich but we lived quite a normal life.

ERLICH: When I visited Anna again in 1992, she had transformed herself. She managed a successful travel agency, but she had also lost her naïve, free-spirited ways.

BERKUT: You can’t be so freespirited. And that is why, maybe you know, what you noticed wasn’t quite right, because I tried to play this game.

ERLICH: Anna and some close friends had pooled their resources to start the travel agency. Then they published an alternative culture magazine and opened a very successful alternative rock nightclub.

[Rock song, Russian “2000” CD]

Soon however, what had started as a cooperative venture became something quite different. One friend became the boss and the others his employees. This was happening all over Russia, although in a slightly different way. When the government privatized its state-owned businesses, it distributed shares to workers, but a few rich entrepreneurs soon bought up the shares and became the new dominant economic class. Anna’s director, like the other “neuvo riche,” liked to display as well.

BERKUT: First he bought a Volvo then a Rolls Royce. It looked very nice. It was two colored like: dark chocolate with milk coffee. Of course we cheated our system. I am not sure how. I not know how, but I am sure that our director knew. He didn’t pay taxes.


ERLICH: Soon rather large men with gold pinkie rings paid Anna’s company a visit. The Mafia’s omnipresent in the new Russia running protection racquets offering what they call a ‘roof’ for legitimate businesses.

BERKUT: When we started the nightclub, I knew for sure that we had the “roof” from Mafia. Even when we started a magazine. I was at the office when the Mafia people came to see what is going on because the magazine means advertising and means money and so it means we had to pay.

For our nightclub, we had to pay $3,000 a month. And we saw this representative of Mafia, of course, in our nightclub, and it was completely nonsense.

[Rock music from Nightclub]

The Mafia looked very strange. Red and purple jackets, so it was very, very fashionable among the Mafia. There was one person who was, as we say, like a wardrobe by size. He was oversized.

ERLICH: And the Mafia Don’s brought their girlfriends to the club.

BERKUT: Of course they were prostitutes, it’s obvious, but unimaginable. They were so well formed and long legged and long haired and everything. I don’t know where they were grown. Really.

ERLICH: The nightclub and magazine didn’t last long. Between the Mafia and extravagant spending, the whole enterprise folded. Anna—for the first time in her life—was unemployed. She later found work as a public relations manager for the Moscow office of a famous Italian clothing manufacturer. But, that too, failed. In the summer of 1998, Anna was appointed as editor-in-chief of a new culture magazine. One week later Russia went into its infamous economic crisis. She worked for several months, but the first issue never appeared.

BERKUT: I worked for free. It’s so typical and common story. You are not protected by the law. You don’t know how to make all these papers. We wait for several months, work for several months—say tomorrow. Tomorrow, tomorrow everything will be fine. Then when we understand that it will never be fine, we just say goodbye. If I received all the money that they owe me and didn’t pay for different circumstances, I could be maybe a millionaire nowadays, really.

ERLICH: And that’s been one of the greatest failures of Russia’s new capitalist system, says Anna. Employers can refuse to pay back wages, and banks can collapse. Many police and government officials collude with organized crime. But the ordinary person can’t get justice through the legislature or the courts. While people are freer to complain than during Soviet times, their complaints still aren’t answered.

[Recording of musical saw]

These days Anna Berkut tries to make a living as a freelance magazine writer covering cultural issues.

BERKUT: We are in the Hermitage Garden, near three Moscow theaters. Events are taking place here which attract young hipsters, and today is one of the days of the festival, theater festival, which is incredible for Moscow.

ERLICH: The festival includes strolling musicians, like this man playing a musical saw.

[Musical saw playing “Rock Around the Clock”]

These days Anna’s life is very tough. Without steady work, she runs out of money for food at the end of the month. Nevertheless, she’s not giving up.

BERKUT: No, I am optimistic, in general, because we cannot live this way for years and hundreds of years. Enough is enough. And our history shows that there are very bad periods, but somehow some people still try to go ahead and break through and so on and so forth. So I think that in general, somehow, things will work out.

ERLICH: Are you still a free spirit?

BERKUT: Yeah, sure. Sure. That’s maybe the only thing which helps me to live under all the circumstances

[Musical saw playing “Rock Around the Clock”].

ERLICH: For the Russia Project, I’m Reese Erlich in Moscow.

[Musical saw song ends]

The Entrepreneur

WALTER CRONKITE: While Russia’s wild west capitalism slammed Anna Berkut to the ground, others have prospered. When producer Reese Erlich first met Yuri Kostin (coas’-tin) in 1990, Yuri was a young employee at Radio Moscow. This is Yuri’s story: from radio reporter to FM millionaire.

YURI KOSTIN: My name is Yuri Kostin. I am the Editor-in-Chief and the President of the Rock Radio 101 and Russian Songs Channel.

This is one of the oldest radio buildings in Russia. It used to be called Radio Moscow. So, you see the door?

REESE ERLICH: (Chuckles) It’s really… it looks like a meat locker. That’s what it reminds me of.

KOSTIN: Yeah, it looks like some military installation.

[Door slams shut]

This is also a very historic place because we broadcasted from here during the coup attempt of 1993.

ERLICH: In 1993 President Boris Yeltsin was fighting for power with the Russian parliament, and he eventually ordered the shelling of the parliament building. Before that, opposition parliamentarians were on the offensive. Backed by some in the security forces, Yeltsin’s opponents stopped most TV and radio broadcasts. Yuri Kostin’s Radio 101, because its transmitter was away from the others, was one of the two stations that stayed on the air.

KOSTIN: It was a Sunday night and I was having a party with my friends and suddenly we heard the reports that the mayor’s office had been seized by the opposition. There were casualties, et cetera, et cetera—it sounded like a real nightmare. And I had a choice—it was one of the hardest choices in my life. I had the choice to go and spend that day with my people who were working in the studio, several reporters, or should I stay here in a safe place in the suburban district of Moscow. And I decided to go and I was very scared because I heard reports of the snipers.

[Sounds of gunshots]

We were here at night in the studio broadcasting news—very little music—just news about what was going on in Russia. The militiaman came up to us and said, “we will not be able to defend you if they come over, so if you need, you can take the guns downstairs.”

ERLICH: Was the station attacked?

KOSTIN: No, some elite troops were sent.

[Ukrainian singers]

ERLICH: I first met Yuri Kostin in 1990 when he was a twenty-five-year-old journalist at Radio Moscow. He met our group of traveling American public radio reporters in Kiev. In October of that year, students had occupied the city’s central square to hold a hunger strike demanding Ukrainian independence.

[Ukrainian singers]

KOSTIN: I didn’t understand why they needed independence. I felt that the empire would never collapse. At least it should last for 500 years, like the Rome Empire or something like that.

[Rally chants in Ukrainian]

We didn’t want changes. We had a lot of things, which were good, of high standards, like medical care.

ERLICH: Yuri says contrary to was some Americans may think, the impetus to get rid of socialism and establish free markets came from the upper echelons of the old Soviet elite.

KOSTIN: It came from the top—it didn’t come from the bottom—from the people. That’s why many people didn’t understand why they need this freedom. And, I was not an exception.

ERLICH: But Yuri quickly caught on. He typifies the young entrepreneurs who took advantage of the crumbling Soviet system to build a business empire. He quit his job at Radio Moscow and got a license to start one of the country’s first rock radio stations.

[Russian rock music, Russian “2000” CD]

KOSTIN: It was all new. We didn’t know how—we were blind like kittens.

ERLICH: Did it cost you anything to get their permission?

KOSTIN: Yes, something like $300, you know; now it’s $300,000. And so, on the 16th of January 1992, we launched the radio station, having 16 CDs in our library, and really bright and nice, talented young DJ’s and reporters.

[DJ at Radio 101]

ERLICH: Radio 101 experimented with a variety of formats. It eventually cut back on news to focus on adult contemporary music, closely following an American AM radio model.

KOSTIN: Yeah, the station was continuing to grow. There was a lot easy money earning in this country and the people were earning easy money like the investment funds, they were paying a lot of money for advertising and by 1993, we had 8 FM radio stations and a lot of AM stations, just in Moscow.

ERLICH: Yuri and his fellow owners worked hard and built Radio 101 into the top rock station in Moscow. But they weren’t alone. Other stations, backed by former Soviet functionaries and international business people, provided stiff competition. They were forming large media conglomerates. There was little room for independents like Kostin. Yuri also made his share of mistakes.

KOSTIN: We were so hungry for new life, so we just spent a lot of money on ourselves. And that was a big mistake. But you can’t avoid it. After being in a cage for so many years, now we have all those opportunities. We spent a lot of money on traveling all around the world and to nightclubs. We should have thought better. (laughs)

ERLICH: Yuri was planning to sell Radio 101 for big bucks in 1998, but that year’s Russian financial crisis sank the deal. He sold the station for much less and set up radio Internet 101.

[Enter studio, music]

ERLICH: So, this is what’s on the air now?

KOSTIN: Yes, it’s Mike and the Mechanics.

ERLICH: In Russia, as in the US, Internet radio is still in its infancy. Many fewer people listen to the Internet and advertisers are reluctant to spend money. Yuri says he might get out of the Internet radio business, if he can.

[Synthecized music]

So, while Yuri is not the multi millionaire he was in the mid 1990s, he still has a nice home in Moscow and a chauffeur-driven Volvo. He says capitalism has been good for young people in Russia because it offers freedom of choice. But he feels sorry for the older Russians who have been unable to adapt.

KOSTIN: When I see old people in the streets, who doesn’t have money to buy a piece of bread, those people who were fighting during the war, our grandmothers and grandfathers, I feel so ashamed that I can’t stand this. And I don’t understand why there are still people who are begging in the streets. There should be a government policy to stop this. And they’ve been talking about it since 1991. They didn’t do anything.

ERLICH: Yuri blames the politicians for failing to alleviate poverty and curb the excesses of Russian-style capitalism. But what does he think about the big businessmen who back the politicians?

KOSTIN: They’re not criminals. What they did would have been done in the same circumstances by Rockefeller, for example, or Morgan. Because this is natural—if you have a pie and it goes directly into your mouth, you bite, this is business.

ERLICH: For the Russia Project, I’m Reese Erlich, Moscow.

The Blue-Collar Worker

WALTER CRONKITE: In 1992 Russia’s new government launched a major campaign of privatization in an effort to quickly establish free markets. It was supposed to cause initial pain, but result in a healthy economy within a short time. Almost ten years later, there’s not much health, but lots of pain remains. Producer Reese Erlich visited the Yasnogarsk (yaz’-no-garsk) Machine Factory, 100 miles south of Moscow, to find out how workers such as Andre Guantinfa [guan-teen’-fah] have faired in the last ten years.

[Factory noise: Squealing brakes, pounding, scraping, and hammering]

REESE ERLICH: In the late 1980s, the Yasnogarsk Machine Factory was a bustling, humongous place. It was the largest—indeed the only—Soviet factory producing heavy equipment for coalmines. Over 8000 workers churned out coal cars and sophisticated pumps. Andre Guantinfa, a plumber by trade, offered an informal tour of the factory.

ANDRE GUANTINFA: (Via Translator) Here in workshop #1, we make the train cars that run through the mines.

ERLICH: I didn’t meet Andre until after my 1990 trip to the Soviet Union, but he describes what his life was like back in those days.

GUANTINFA: With my wife and I working, we earned enough to buy food, clothes, furniture, a TV, fridge, everything. Medical care was free, and the doctors were better then. The trade union paid for part of the cost of childcare, so it was quite affordable.

ERLICH: Life was far from perfect, Andre says, but it was comfortable and predictable. He strongly resented the lack of political freedom, however, under Soviet style socialism.

GUANTINFA: If you said anything critical, you were taken to prison. It was just a dictatorship of one person or the small number of men in power.

ERLICH: Mikhail Gorbachev tried to change all that. In other countries, Gorbachev is remembered for allowing greater political freedoms in the Soviet Union. Like most Russians, however, Andre focuses on Gorbachev’s economic failures.

GUANTINFA: Under him the country began to go to ruin. He is praised everywhere in the world, but what did he do? He passed a law banning vodka, and it backfired. He passed a law on the control of production, and again, it went wrong.

[A truck passes]

ERLICH: A lot has changed in Yasnogarsk over the past ten years. The factory was privatized. The workers received company stock, but because of economic hardship, they had to sell their shares to wealthy investors from Moscow. The promise of democratic capitalism turned into the reality of control by an outside elite. Production is way down, and the once bustling factory of 8000 now employs 2000.

[High frequency tool]

[REESE to a worker] How many of these do they produce in a month?

[WORKER] (Via Translator) One or two. We used to produce up to twelve machines.

On the factory floor, Andre introduces me to fellow worker, Alexandr Sergeivich Gorbachev. …I know. I was thinking the same thing. So I asked him, “By any chance, are you related to…?”

ALEXANDR SERGEIVICH GORBACHEV: (Via Translator) In fact, no. My grandma says she come from Stavropol region, so maybe we’re a distant relation to Mikhail Gorbachev.

ERLICH: Alexandr Gorbachev says that in 1998 everything began to unravel at the Yasnogarsk Machine Factory. Management told workers they couldn’t afford to pay their wages. In fact, the Moscow investors had sent money but the managers had invested it, according to Gorbachev.

GORBACHEV: They still didn’t pay our wages. They put the money into pyramid schemes and the managers lived on the interest. Then in August 1998, the economic crisis hit and the banks collapsed. They lost all the money for our wages. There was nothing.

ERLICH: In December 1998, the factory director and chief accountant were arrested. The managers were allegedly stealing company assets. The workers were furious and went on strike. Andre says the women strikers were the most stalwart, even blocking the regional railroad tracks as a way to focus attention on the strike.

GUANTINFA: The women were the main fighters. When they were going to block the railroad, the south line, the women went ahead, and I was running after them to help, and they told me “Beat it!”

ERLICH: The strike lasted seven months, but the workers won important concessions. New managers were installed. An elected commission of three workers must now approve all company purchases and sales—an effort to prevent embezzlement by managers

[Tea kettle steaming, clank of tea cups]

In the cramped commission office across from the factory, Andre pours cups of strong, black tea. A benevolent drawing of Lenin peers down at us. Andre explains that Lenin is left over from the days when this was a factory administrative office, and the workers see no reason to remove him. Many Russians still respect Lenin as a strong leader who fought in the interests of the working class.

[Sound of rattling contract papers and talking]

Ironically, the worker’s commission may be operating closer to Lenin’s ideal of working class control than anything implemented in the old Soviet Union. As we’re speaking, a factory secretary rushes in asking for signatures on a sheaf of papers.

[Papers rustling, workers talking]

Nothing moves in or out of the factory without commission approval. So Andre says the commission members—all workers—must learn a lot about how to run a factory.

GUANTINFA: Those papers came from the head of the supply department. If we don’t find the price satisfactory for the purchase, we don’t sign it. Same for the prices of goods we sell. We try to adjust the prices so they are more profitable for the factory.

[REESE asks Andre if the factory is making a profit?]

I really can’t say that there is any profit, but you’re going to talk to the factory director. So I’m interested myself in what he will say.

[Sounds of walking up stairs, door opens]

ERLICH: Factory director Yuri Karunin’s office hasn’t changed much since the old Soviet days. The door with thick leather padding still guards the inner sanctum. Karunin says the factory, even after ten years of privatization, isn’t making a profit. Monthly income meets expenses, he says, but the factory can’t pay off old debts.

YURI KARUNIN: We need an infusion of one million dollars to survive. On paper we are making just enough money, but actually, we work without a profit.

ERLICH: The problem, says Karunin, isn’t the alleged embezzlement by former managers. He claims that they made business mistakes but aren’t criminals, and notes the case is still under investigation by authorities. Karunin says the factory mainly suffers because of the huge decline in Russia’s coal industry.

KARUNIN: The government has abandoned the coal industry. It’s a mess. We used to sell equipment to the Ukraine, but it is not even in the same country anymore. The miners do need the machinery, but the mines lack money, and the situation remains difficult.

ERLICH: I asked Karunin why a large majority of Russians say their lives were far better in the Socialist Soviet Union?

KARUNIN: It was more convenient for people, the system of production and distribution, the stable wages, but we produced machinery whether there was demand or not. I’ve talked to miners, and they said they used to accumulate machinery that they never used. The old system was ineffective and so bad; it had to break down.

[A door closes, walking out of manager’s office, then factory sounds]

ERLICH: Back on the factory floor, Andre introduces me to another worker, 61 year-old Pyotr Kalensnikov. Pyotr acknowledges that a lot of things didn’t work very well in the old Soviet Union. But life was far better for ordinary working people, he says. Employment was virtually guaranteed and everyone had a decent, if minimal, level of social services such as health care and education. Today, says the bitter Kalesnikov, the social system has broken down, particularly for the youth.

PYOTR KALENSNIKOV: The young people now resist education. There used to be Young Pioneer camps and sports schools for them. Now there’s nothing. They’re not interested in anything. They even try to steal electrical power lines from the power poles.

[Sound of factory ambiance slowly fades away]

ERLICH: Andre and I leave the factory for a bit of respite at a park across the street. The bushes are overgrown. A statue of Lenin resolutely pointing the way forward is covered with bird droppings.

[Outdoor sounds, birds]

The Yasnogarsk Machine Factory is all too typical of Russia’s economic morass. Privatized industries were supposed to become more efficient and productive. In reality, Russia’s new economic elite is far more interested in a quick ruble than in long-term investment. The economy is becoming increasingly monopolized by a small number of businessmen who have little concern for workers like Andre. When asked if the new capitalism, for all its faults, will ultimately provide a better life for Russian workers, Andre laughs.

GUANTINFA: In this country it is not profitable to produce anything. It’s profitable to sell things because people who sell things live well at the expense of consumers and workers. When privatization began, nobody explained anything. So now management says, “Well, you supported privatization.” But we didn’t know better.

ERLICH: For workers like Andre, the promises of free markets and democracy have proven hollow. He’s part of a small, but angry worker’s movement trying to organize for the rights of ordinary Russians.

For the Russia Project, I’m Reese Erlich, Yasnogarsk, Russia.

Walter Cronkite Remembers

WALTER CRONKITE: From 1946 until late 1948, I was United Press correspondent in the Soviet Union. And I’ve had an intense interest in that country ever since. Producer Reese Erlich and I sat down to discuss my days in the Soviet Union. Then he visited some of my old haunts in Moscow to see how things have changed.

[1940s chorus singing]

Moscow after the war was as war-torn places are likely to be, terribly crowded for housing. People are doubled, tripled, quadrupled up in small apartments, and they weren’t about to let me have a hotel room. Fortunately, Dick Hotelet of CBS had two small apartments in the hotel—the Metropol. We sat in the lobby of the Metropol for a number of days.

REESE ERLICH: Today, the Metropol is a renovated, five-star hotel. Retiree Nicolai Fedosov, who worked the reception desk from 1947 to 1954, fondly remembers the days when foreign reporters such as Cronkite lived in the hotel.

NICOLAI FEDOSOV: (Via Translator) Most of the guests here were the foreign correspondents that lived here. But among the correspondents, the most famous were from England and America, and they were really rich because they could afford the office. They could afford the accommodation where they could rent their own rooms, and especially the United Press and Associated Press.

ERLICH: In 1946 the cold war had begun, and Joseph Stalin said the Soviet Union needed to defend itself from American aggression.

[Stalin speech over loudspeakers]

American reporters were suspect.

CRONKITE: It was psychologically difficult for any reporter from the Western countries. Two years in Russia was two years under arrest, practically. Not behind bars, but no freedom of movement whatsoever. To get a car, you had to hire a driver because the whole purpose of this was to keep track of foreigners. All these people worked for the secret police. And that’s how they kept track of you.

ERLICH: Retiree, Fedoso, says such surveillance was justified.

FEDOSOV: (Via Translator) I think that the KGB was definitely needed to protect socialists because there were lots of guests and lots of foreigners coming. We had to do that. Those times were really vulnerable and socialism was just starting. I remember all the workers from KGB were women. It was very interesting because, like, there was a maid on duty from KGB and she was remembering everybody. She was very good. She had a memory to remember everybody who was coming in and coming out. So, those kinds of things were needed.

ERLICH: But foreign correspondents had more to worry about than the KGB. It was impossible to speak with ordinary people. Roy Medveyev, a famous Soviet historian and political dissident, remembers the political climate of those years.

ROY MEDVEYEV: (Via Translator) I didn’t have any thoughts about ever talking to foreign correspondents, let alone the American correspondent, because it was absolutely impossible. Even in the 60s, the first meeting with Solzhenitsyn by Walter Kaiser and Hedrick Smith was a secret meeting actually, because they had to leave the car somewhere behind—some blocks away from his apartment and they were just afraid that they will be expelled from the country. It was dangerous for the ordinary citizen because they might be arrested.

ERLICH: So how did Cronkite and other reporters file their stories?

CRONKITE: Rewrote the newspapers. That and whatever intelligence our own embassies and other friendly embassies would yield to us. But that kind of intelligence was very limited because they knew it went through censorship, of course, and they weren’t about to expose themselves.

[Traffic and people walking]

ERLICH: For two years Cronkite lived in an apartment owned by United Press near Moscow’s famous Arbat Street.

CRONKITE: The apartment we were in, we were the only foreigners in it. And they never kicked us out of it. We never paid any rent. We had a free apartment. They never caught up with us. But, by the same token, there was no maintenance of the building. It was a pretty miserable place. All the rest of the apartments were filled with Russians.

[Sound of food cooking on the grill]

They had a hot pot on the stove all day long, run by one of the babushkas, one of the grandmothers, who stayed home to do that. She watched the pot and others would buy the one cabbage they could buy that day. The one beet they might be able to buy that day. They were desperate right after the war. If they were lucky enough to get a piece of meat, it looked like it was left over from a train wreck.

ERLICH: Eventually the USSR recovered from the hardships of the post-war period. And Arbat Street underwent a change that Cronkite could never have imagined back in 1948.

[Music and talking from Arbat Street]

Vinay Shukla, a correspondent for the Press Trust of India and long time Moscow resident, says Soviet generals used to eat dinner at the Prague Restaurant at one end of Arbat Street.

VINAY SHUKLA: During the Gorbachev-Perestroika year the traffic was closed; it was made and converted into a pedestrian street and it was, at that time, it was Moscow’s Hyde Park with a lot people coming with lots slogans and speaking speeches and other things, you know, different views. And since it was very close to the Kremlin, this was the place where the public pressure was all the time mounted on the new emerging fledgling democracy in this country.

ERLICH: But Arbat’s years as a free-speech have long passed. Today, it’s crowded with people selling chotchkies to foreigners, items that—ironically enough—would be quite familiar to Cronkite.

SHUKLA: It’s mainly a tourist attraction. You have got rows of souvenir vendors. You can get Russian Metrushka dolls and many other Russian souvenirs. Old army uniforms. You can buy one even like general’s uniform here and old posters of Lenin and all that. All Soviet artifacts you can get here.

[Russian Internationale]

ERLICH: In many ways Walter Cronkite’s neighborhood reflects the massive changes of the past 55 years. Where proud Soviet generals once strode, today only their jackets remain. For the Russia Project, I’m Reese Erlich, Moscow.

From Green Activist to Ambassador

WALTER CRONKITE: In the fall of 1990 students held a hunger strike in Kiev that would later be recognized as a turning point in the movement for Ukrainian independence. Producer Reese Erlich covered that epic event where he met a radical environmental activist. Ten years later that activist ended up in a very unexpected place—and in a moral predicament.

REESE ERLICH: Our scraggily group of public reporters arrived at the Kiev train station with little advance warning of the unfolding events. The bustling train station seemed normal.

[Kiev train station]

But when we arrived at the Great October Revolution Square in the center of Kiev, thousands of people were milling about, meeting with student hunger strikers and cheering on speakers.

[Speaker, followed by applause]

The students and their supporters were demanding independence for Ukraine, something unheard of since the consolidation of the Soviet Union, 70 years before. The Soviet Union was supposed to be a nation built on equality, but growing numbers of Ukrainians thought they suffered at the hands of the Moscow government.

UKRAINIAN SPEAKER: (Via Translator) These students are committed to going out to the villages and the other cities of Ukraine and spreading the word about the revival that happened here and to spread the word about the victories that happen here so that everyone can unite around this cause.

[Ukrainian male singer from mic with singers in background]

ERLICH: That student hunger strike would become a turning point in Ukraine’s fight for independence. I later met a middle-aged Green Party leader named Yuri Scherbak. He had recently been elected to the Supreme Soviet of the USSR as part of an insurgent slate. Scherbak says the Ukrainian government later renamed Kiev’s central square and erected a statue of a student.

YURI SCHERBAK: This square became Square of Independence immediately after student strike. It’s very important. The statue on the column, a young Ukrainian girl, which symbolizes our spirit of freedom and independence, stay exactly on this place where students were demonstrating.

ERLICH: I caught up with Yuri Scherbak recently in Ottawa, Canada. His chauffeur-driven Town Car took us by the Canadian parliament building with its famous carillon.

[Bells of the Parliament building carillon]

SCHERBAK: We are in the heart of Canadian democracy. I like Canada for democracy.

ERLICH: In 1991 Scherbak became Ukraine’s Minister of Environment Protection. After that, he was a diplomat in Israel and then ambassador to the United States. Today, Yuri Scherbak, dissident Green, is Ukrainian ambassador to Canada. To his credit, he hasn’t been accused of corruption like many other Ukrainian leaders.

SCHERBAK: I never took part in some speculation, in some privatization process. My position is very high in governmental system. I’m getting very good salary.

ERLICH: Scherbak has put on a few pounds; the hair is a little thinner. But he remains the jovial guy I met in 1990.

Here’s a limousine. It must be somebody important right?

SCHERBAK: Ah, maybe, or has a lot of money. (Giggles)

ERLICH: It’s our car.

SCHERBAK: This is it?


[Car door opens and closes]

The ambassador regrets he can’t just wear jeans and hang out at student protests anymore.

SCHERBAK: I slept in my necktie because I needed to be in my formal dress. (Laughs) I hate it. I hate it. Because, you know, a man who plays jazz cannot be very official, but I became official.

ERLICH: Scherbak used to be a jazz pianist, but these days he does his boogying at the embassy.

[Car door opens, we get out]

We arrive at the Ukrainian embassy in downtown Ottawa. It’s a thoroughly modern building, a far cry from the crumbing infrastructure in much of Ukraine.

[Walking into embassy, door opens and closes]

SCHERBAK: This is a three-story building.

ERLICH: Scherbak isn’t very happy with Ukraine’s environmental development.

SCHERBAK: Now our air pollution is much better than 12 years ago. But why? Because a lot of industries are stopped.

ERLICH: It’s pollution control through, through economic collapse.

SCHERBAK: Right, right, right.

ERLICH: Scherbak says his country must shift away from reliance on dirty industries such as coal and steel. He’s willing to criticize the government on environmental issues, but Scherbak staunchly defends his country’s right-wing president. President Leonid Kuchma stands accused of corruption and ordering the murder of political opponents. A former Ukrainian security officer says he recorded President Kuchma ordering the elimination of opposition journalist Georgy Gongadze (gone-gaad-za).

But ambassador Scherbak denies everything claiming the recordings were concocted by the security services themselves.

SCHERBAK: It was a very well done provocation by some services. I don’t believe absolutely that president was involved in the situation with Georgy Congadza.

ERLICH: But that argument doesn’t wash with government opponents who say Kuchma’s voice is clearly recognizable on the tapes. They also sharply criticize the president for covering up massive corruption by his political allies. Any ambassador is expected to defend the policies of his country. But I asked Scherbak if he has any qualms about his defense of Kuchma.

[Reese’s question to Scherbak] If you and I had been sitting in your apartment in 1990, as we did, could you have envisioned these kinds of scandals, this kind of corruption?

SCHERBAK: Of course, no. I was so idealistic, but now I understand that, unfortunately, this road to democracy is not very easy.

ERLICH: The road to democracy is indeed strewn with obstacles. High government position, power, and money have a funny way of affecting former activists. Ambassador Yuri Scherbak, is considering running for parliament on the Green Party ticket in 2002. If he wins, he would leave the diplomatic corps for the legislature. Then it would become clear whether his support for President Kuchma stems from conviction—or necessity.

For the Russia Project, I’m Reese Erlich, Ottawa, Canada.

Capitalist Architect

WALTER CRONKITE: In the old days, Russian communists warned that foreign capitalists would try to undermine Soviet power. Well, some really did. Meet Bruce MacDonald, an American advertising executive, who was one of a handful of Western businessmen who opened up shop in Moscow in the late 1980s. He and others taught Russians about free markets only to find that their students learned their lessons too well. Producer Reese Erlich begins the story in Moscow.

REESE ERLICH: It’s hard to imagine now, but back in 1990, the opening of the first McDonald’s in Moscow was a very big deal. People lined up for hours to get Big Macs and Cokes. American advertising executive, Bruce MacDonald basked in the reflected glory.

BRUCE MACDONALD: My name is MacDonald and everybody thought I owned all those restaurants so I was amazed that nobody tried to kidnap me.

ERLICH: Bruce didn’t own McDonald’s of course. But he was on his way to becoming one of the most respected expatriate business leaders in Moscow. He knew everyone who was anyone in the Western business community.

[Restaurant kitchen dishes clanking, etc.]

ANDY RAFALAT: I’m Andy Rafalat. I’m the deputy director general here as the Russians call it. I work out of the Pepsi office in London developing Pizza Hut businesses all over Europe and the Middle East.

ERLICH: Let’s see, is that salads over there?

RAFALAT: Exactly, we go through to the salad prep room.

ERLICH: How do you get lettuce in the Soviet Union?

RAFALAT: We don’t, to be very simple. (laughter)

ERLICH: Lack of basic consumer items frustrated Western businessmen back in 1990. And nobody was making a profit. But as Bruce explains, they were on a mission.

MACDONALD: A lot of the American, in particular, business people who went to Russia in the early days, believed that they were bearing the golden chalice to this uncivilized group of people who needed to realize that capitalism was the best system in the world.

ERLICH: Turns out that wasn’t so easy. Most Soviets didn’t want capitalism. That became clear when Bruce set up the BBDO advertising agency in 1989.

MACDONALD: Lenin had told everybody that advertising was an evil capitalist art and the people we met almost all said if a product is advertised, there must be something wrong with it. Why? Well, in a shortage society if you put something on the shelf, people will buy it. If you have to advertise for it, there must be something wrong with the product.

ERLICH: And that’s when you switched over to marketing, right?

MACDONALD: That’s right. (laughs) Absolutely.

ERLICH: Very quickly, Bruce’s company became BBDO Marketing.

MACDONALD: Well, the Russians all knew marketing as a little bit like sex. They didn’t quite know what it was, but they knew they needed some of it.

ERLICH: Many foreign businesses were setting up joint ventures with Soviet partners. Russian politicians, party bosses, and others at the middle levels of power saw an opportunity to make a quick ruble. They were to become key proponents of dissolving the old system. Bruce was particularly enthusiastic about a joint venture between a collective farm outside Moscow and an American construction company.

MACDONALD: They’re actually building a very exciting project which involves creating a brand new village of 540 low-rise condominium units oriented to the expatriate market.

ERLICH: That joint venture was called Rosinka, and 11 years later it is tremendously successful, although not in the way the American capitalists had envisioned.

Peter Startsev, the deputy general manager of Rosinka, shows off the housing development’s sports center.

PETER STARTSEV: It’s quite big, it’s about 10,000 square meters. It includes a whole range of sports facilities like swimming pool, indoor tennis court, squash, racquetball, a gym.

[Kids singing in English]

This is our preschool kids going for a walk.

ERLICH: Rent for a Rosinka townhouse can reach $120,000 per year. So the owners earn a good profit. But it’s not a joint venture anymore. Back in 1993 the Russian owners kicked out the Americans and reincorporated as a Russian business.

STARTSEV: They teach us capitalism.

ERLICH: Startsev says the Russian owners learned a lot from the Americans.

STARTSEV: The Russians wanted to work. Russians had land, for example, like us. Other Russians had workmen. What we lacked was experience.

ERLICH: Bruce has a different perspective. He says the Russians took advantage of the Americans.

MACDONALD: It fell into the normal joint venture. It’s my joint and your venture. Eventually, there were lawsuits. The Americans attempted to involve the US government and the Russian government. It was eventually resolved in Russian courts to Russian favor. The Americans lost more than face and retired back to the United States, bankrupting themselves in the property investment.

ERLICH: Dozens of other joint ventures ended up the same way. The foreigners were forced out, sometimes through legal action and sometimes through violent intimidation. The Russians were following in the footsteps of American robber barons who use every legal—and illegal means to accumulate their empires. Bruce says the sophisticated American businessmen were, in essence, outsnookered.

MACDONALD: We only believed there two important things: growth and eventual profitability. Whereas the Russians had an entirely different view of the two things that were most important to them. They were power and politics. And that had to do with controlling something, with benefiting from it. It had less to do with driving a business to a successful and profitable end.

ERLICH: Today virtually all of the joint ventures from the late 1980s have dissolved. Many other American businesses remain unprofitable. A few in the extractive industries, such as oil and natural gas, might reap huge profits—if they can continue operating.

By the late 1990s, many Russian businesses were going bankrupt and foreign investment slowed. So Bruce decided that after ten years as a pioneer businessman in Moscow, it was time to leave.

[Getting into car, engine starts and runs]

MACDONALD: We’ve just come across the Connecticut River, about ten miles from Quechee and we’re now entering New Hampshire.

ERLICH: Bruce MacDonald moved out of his apartment in Moscow and sold his homes in London, Florida, Spain, and New York to move to Quechee [kwee’-chee], Vermont. Buying property in Quechee means you must join the local country club. Dues are $2,600 a year, and for another $1,500, your family actually gets to play golf.

MACDONALD: It is a rather tony community. By those who love it, its called Quechee; by those who dislike it, its called Gucci.

ERLICH: For awhile after his return to the US, Bruce worked with an Internet start-up. But that went bankrupt in the dotcom meltdown of 2000. Russia isn’t the only country facing economic crisis. Now he’s a consultant with a fledgling company that takes computer security technology developed by the CIA, NSA, and other government agencies and sells it for commercial use.

But Bruce may never again feel the excitement of his years in Russia.

MACDONALD: I was personally shot at twice, threatened by a machine gun a third time. And yet, on the other hand, I feel that we managed to influence a generation of people who will be running marketing and advertising in the country for a long time in the future.

ERLICH: Bruce recognizes that over the past ten years Russian capitalism has developed serious problems. He even concedes that a significant majority of Russians oppose the new system.

MACDONALD: Nobody suggests that the system was working that well. We are in a society in which 50 percent of the people or more have been passed over. It was not like changing a nation from capitalism to communism, or to socialism where everybody in the nation could feel the impact, or thought they could feel the impact in personal, beneficial terms. This was changing the superstructure of a nation in its business, which doesn’t impact upon everyone. So, I’m not at all surprised that a lot of people felt they were mishandled, abused, or even worse.

ERLICH: But Bruce sees some progress in halting corruption and normalizing business practices.

MACDONALD: I think it’s going to be a successful nation and a proud nation. It needs to develop pride in itself again. It needs to clean up its act. I believe it is in the process of doing that. Russia will become an important global citizen. And I think we’d be very smart if they were our friends.

ERLICH: Bruce MacDonald went to Moscow with a mission of bringing capitalism to the Soviet Union. In retrospect, this effort to remake a vastly different society in America’s image produced some rather unexpected and unwanted results.

For the Russia Project, I’m Reese Erlich, Quechee, Vermont.