La Jolla, March 2009
Dear Family and Friends,
I have not been traveling since December but thought that you might be interested in parts of my travel blog emails from some time ago.
Bucharest has changed so much since 2003. Hotel prices have tripled and the cost of daily drivers more than doubled. But the legacy of the past still remains.
Wishing you safe travels.
Sue
Bucharest, May 2003
Dear Family and Friends:
It’s two weeks since I arrived in Bucharest but the first evening of no work and no group dinners. I am here with a large group—24 specialists in various kinds of banking, finance and macroeconomics. My area, corporate governance, is allocated 4.7 percent of the total report. After two weeks, I am to write a page and a half. I calculate that the cost of preparing such reports comes in at $9,400 a page, although my fellow economists don’t look at it that way. Tonight I have a free evening and a chance to do as I wish and so I will write to you and my friends.
I have found Romania to be a very beautiful country. I arrived late on a Saturday afternoon and spent the next day wandering through the old city. The most beautiful buildings were those of the country’s central bank, and of the state savings bank. I spent the day wandering through meandering streets, watching the stray dogs search for food in the garbage not yet picked up by the garbage trucks and wondering if the children without shoes were much happier. In many ways, Bucharest is a prosperous city. My hotel, the Hilton Athenee Palace, with its marble floor in the lobby and Back Street Boys music in the outside bar could be anywhere. But a full dinner with wine and a 20 percent tip comes to only $10 and the cash machines will only deliver $150 at a time. The average income is $95 a month or just over $3 a day. Magnificent 19th century homes with five bedrooms in leafy districts sell for just $200,000.
One afternoon I asked my driver to take me through Banesea, an area north of the center. I was told by the local representative of a local bank that I should go to Banesea if I wanted to understand Romanians. What I found was a lot of new housing hidden behind walls that made it impossible to see inside. It was not much different from a comparable area in Bratislava. “Black money,” was the comment from Davor, my 50-something driver who spoke English only using nouns. In three days of driving me from meeting to meeting, Davor had never expressed a subjective comment. But he knew well where we were and sensed the reason why I wanted to see it. Knowing I liked tennis and sports, Davor then showed me the best part of the area—a public tennis club in the center of a forest. The signs on the wall said that it was the place where the Romanian senior tournament was played. Of course, I inquired as to the prices and availability of tennis pros. $7 an hour for a court and double that if you want to play with a hitting pro. But it was, as Davor explained, black money that had been earned outside of the law.
This is the land of Ile Nastase and so I asked about tennis. Initially I was told that the courts of the central bank had been his club and then this version of the history was discounted as unreliable. One of my colleagues (from the group of 24+) plays in a competitive league and so I convinced her to look for tennis courts where we could play.
We found something the first Saturday. It was the Diplomatic Club, the facility built by King Carol, the king Romanians seems to like the most. King Carol’s club had lovely clay courts. My colleague, Zusana, chatted up the grounds-keeper, who turned out to be the brother of the local tennis pro. Zusana needed a racquet and so Dragos, the tennis pro, showed up 15 minutes after our inquiry. Dragos decided that we needed help, which was true. Zusana was incredibly inconsistent although a better natural athlete than me. Dragos played with us, uninvited for two hours, before finally we decided to quit in the 90 degree heat. We agreed to come again the next day.
It was even better. After two hours (in the 90 degree heat), I sat on the bench and asked Dragos his story.
Dragos is a very handsome man with sad eyes, in his early 50s, I would guess. I asked about Nastase. Nastase was the son of a tennis grounds-keeper also. But two divorces had divided his estate and he had little left. The current business leaders, by contrast, are not such a good tennis players but are good politicians. Dragos explained that to be permitted to travel abroad before 1989 meant that you had agreed to spy for the local spy service, Securitat. Securitat must have been very bad. It’s unusual that ten years after the change in regime people still talk about the work of the internal intelligence services. Dragos explained that Nastase had spied for Romania but nothing seemed to have come from his insights. By contrast, the current leaders are smart. With their connections, they have created powerful business groups. And as one of my colleagues explained, one among them discovered Boris Becker before Becker won Wimbledon as just as a teenager.
Dragos told me how he had tried different professions. He had been a poet, a singer (with a national reputation) and then his brother (the grounds-keeper) started to play tennis. Dragos learned how to play tennis from a book (much like Dad) and then started to challenge his brother (unlike Dad). After four years, he beat his brother, Dragos told me. And then Dragos became the tennis pro of the Diplomat Club, a club for ambassadors and their kids, with Securitat microphones hidden in the trees overlooking the courts. Such was life in Romania before the Revolution. My colleague Zusana gave Dragos $20 for playing with us.
That was the week before most of our group arrived. (I had arrived early to try to get my part of the work done before the chaos of a large group descended.) So the second week-end was much more touristy than the first. The head of our group, Juan, is Costa Rican and as he keeps telling is, is just a poor boy from Costa Rica. I decided to question Juan on this today over lunch. “So you know about milking cows and how to time the harvest season?” I asked trying to think of some questions relevant to farming. Juan went on to tell us about his rodeo days, where he rode angry bulls on a dare. “Were you ever injured?” I asked wondering if Juan was just teasing a group of economists. It turned out that the bull had left his permanent signature on Juan’s forehead, as he showed us, and explained the need for rodeo-riders to follow the rhythm (and centrifugal force) of a bull rocking in a circle.
Last week-end Juan wanted to show us the story of Dracula. It turns out that Dracula’s castle has long since been destroyed, as my San Diego-based Romanian facialist has explained to me many times when I visited my parents in La Jolla. Juan managed to get me out of bed at 7 am on a Sunday morning to visit Dracula castles. We left at 8:30, four minivans in a convoy heading north. We stopped in a town called Sinaia named after, you guessed it, Mount Sinai. I thought that we were planning a mountain hike and had worn khaki shorts despite the 60 degree forecast for the mountains. There I was in a Mount Sinai monastery on a Sunday morning in Romania. I thought my little shorts inappropriate and instead decided to walk around the church’s grounds. I had watched as my driver crossed himself three or four times every time we came within five miles of a church and I realized that some in Romania follow the church very closely. “I am praying,” the driver explained as he crossed himself, first on his forehead then his chest, then on his right chest and then left. 6 Soon it was time for some castles. King Carol had built the castle near Sinaia and President Caucescau had renovated it. It was perhaps a good thing that Caucescau had never visited. The castle was made of wood and would have been susceptible to fire. We were obliged to weak wool socks over our shoes. I had unwisely chosen the socks for very big shoes—I didn’t realize that different sizes were available. My socks kept falling off and I was afraid that the guards would be mad at me. As it turned out, I raised the ire of the guards still further.
Most of the castle consisted of rooms showing the swords and shields of various armies. Only the smoking room looked comfortable. It was filled with Turkish-type rugs on the floor, the walls and the ceiling. It was the only room for which I wanted a photo. Although cameras were prohibited, I had kept my little digital Canon in my pocket and then sneaked a photo. “Hide it, hide it,” whispered my fellow visitors, who until then had not spoken to me. “Poches, poches,” said the guards referring, I assumed, to the fact that I had put my little camera in my pockets (along with my cellular telephone and wallet). I suppose that with the interest in encouraging tourism, the museum guards are not permitted to do body-searches of tourists. As it turned out, the photo was heavily underexposed even with the flash of my camera. But still I will put the photo on the Bucharest page of my travels so that you can see my efforts. Needless to say, I could not venture a second photo.
It was lovely day of walking up mountains, through city center squares and finally, at four in the afternoon, a traditional central European lunch that takes you well into the evening.
The driver of my minivan was a trainer in his former life and had once been an athlete. These were useful skills as we raced back to Bucharest to meet Juan’s return time of 9 pm. George was following the lead driver, Dorin, with his radar-detecting machine. George and Dorin had been together for ten years and Dad didn’t want to get too far behind. But passing cars on the right at 140 kilometers per hour with a meter to spare could only make this 50-year old woman feel a little nervous in the front seat. But George and Dorin got us back safely to Bucharest at our luxurious Hilton Palace, ready for yet another adventure.
Sue
Saturday, March 14, 2009
Thursday, December 18, 2008
Simmering Troubles in Sofia
Frankfurt, December 2008
Dear Family and Friends,
Am writing to you from Frankfurt airport after almost two weeks visiting Bulgaria. Last month, one of my correspondents wrote asking if I was ok, fearing that I had encountered troubles in my travels and not made my way back home. Indeed I am still traveling and have resolved to go back to writing when I have a free evening and no one with whom to share dinner.
“Sue, put on your seatbelt,” was the instruction of my colleagues, Alex and Francesco, as we rode in a taxi through Sofia one afternoon this week. “He might slam on the breaks,” they warned, referring to the taxi-driver and worrying that I might be thrown through the windshield. I had taken the front seat, as I usually do when traveling, since the front seat usually has more support than those in the back. When I entered the cab, I saw on the dashboard two big signs, with the sign in English three times the size of the Bulgarian version. The English sign explained that the driver was obliged to put his id on the dashboard and that I, as a passenger, should ask for it. So I did. “Where is the id?” I inquired of the 30-something young man with an emerging beard. “It’s in the back,” he said and waived toward Alex and Francesco. I looked back and couldn’t see it. “No, it’s there,” the driver pointed to the glove compartment in front of my seat. I took the driver up on his invitation and opened the compartment to find only a car registration and similar documents. This is when Alex and Francesco started to worry. They explained later that they thought I might find a gun or narcotics and then we would all be in deep trouble.
The taxi industry in Sofia is famous for its poor regulation. In 2001, when I was there for two weeks, I discovered that some taxi companies impersonate others, using logos that look similar to reputable companies but charge rates that are four times higher. “Then the taxi industry was unregulated,” explained the officials from the Competition Commission in an earlier meeting. “Now it is properly regulated.” From a passenger’s perspective, it didn’t seem that they had improved all that much.
Having put on the seatbelt, I decided to test the credibility of government institutions for the man on the street--in this case, our taxi-driver. “What is your opinion about the government?” I asked. “They are all crooks. If I had a gun, I would kill 12,000 of them.” I was too stunned to ask why 12,000 but pleased to hear that he didn’t have a gun. I decided to keep probing. “You have an election in a few months. You can elect a new government.” “They are all the same,” was the response. He went on to explain that it was the same Communist-parties that controlled the country in 1989 before the Berlin Wall. It was also the same clans and in some case, the same individuals. “They all steal,” complained the driver, suddenly becoming law-abiding himself. “We are ready to march on the streets … anytime …”
By then, Francesco was getting very unnerved. “Here, here, please stop,” he impatiently instructed. The driver had to move to the curb and then get past the bus stop with its many waiting passengers. We then were obliged to walk several blocks in the rain to find our meeting since Francesco had cut the ride short.
It was a similar story last night in the hotel bar. When time is pressed, I often have a light salad as dinner in the bar late in the evening. It was the third or fourth time this week that I had ordered a Balkan Shopska Salad with wine and bread. The bartender with his colored earrings in both ears told me that he was studying economics at the university and was acting as a part-time adviser to the mayor of one of the towns. “We want to change everything,” he said. “Five years ago, the student town was clean. Now it is run by the mafia. They have drugs, prostitution, everything. We are ready to march in the streets,” suggesting that such public protests could solve the problems of organized crime in Bulgaria.
Organized crime even arose in one of our official meetings with government ministry counterparts. For one senior official, I gave my usual presentation of the need for simple consumer information, fair business practices, an efficient method of resolving consumer disputes, and a system of financial education. All this is part of our program on consumer protection and financial literacy. When I came to the discussion about out-of-court dispute resolution, he became incensed and defensive and said, “Everywhere in the world, they have these problems. It is not just in Bulgaria.” It took me a moment to realize that he thought I was suggesting the presence of organized crime in the financial sector.
Last Spring the European Commission halted disbursement of grants for Bulgaria, arguing that the problems of organized crime are so pervasive that the Commission could not be sure that some of the funds would be stolen. As governments worldwide are searching for new revenues to cover their deficits, a loss of funds (and international public criticism) has hit hard in Sofia.
In my travels, I have been in Tbilisi, Georgia and Kyiv, Ukraine as brave journalists wrote about government corruption and were subject to contract-style murder. Tens of thousands, including many from the professional middle-classes, braved snow and cold and police mistreatment to make a public statement. One can wonder if the same will come to Sofia.
In the meantime, I can only wonder about the restaurant that Francesco, Alex and I walked into another evening this week. It was in residential area and had only one partially hidden sign. Francesco was certain it was a restaurant and walked in. He and Alex checked to make sure that it was not a “gentlemen’s club”. It was not but it had no customers even at 8:30 in the evening. When we asked for the near-disco music to be turned down, it took three requests and still was louder than I wished. The staff hid in the kitchen and we had to find them to obtain service. They did their best to ignore us. My guess was that we had wondered into a private restaurant masquerading as a public facility open to the public. As I ate my puree potatoes made from a mix, I wondered why even criminals would not want well-prepared food.
In the meantime, I can only think about Georgi Markov, the famous Bulgarian dissident who is thought to have been killed by the Russian secret police. As confirmed by several high-profile defectors, Georgi Markov was stabbed by an umbrella with a ricin-coated pellet. Of all the countries in central Europe, only Bulgaria had such a famous story with ties to Russian secret police.
Sue
Dear Family and Friends,
Am writing to you from Frankfurt airport after almost two weeks visiting Bulgaria. Last month, one of my correspondents wrote asking if I was ok, fearing that I had encountered troubles in my travels and not made my way back home. Indeed I am still traveling and have resolved to go back to writing when I have a free evening and no one with whom to share dinner.
“Sue, put on your seatbelt,” was the instruction of my colleagues, Alex and Francesco, as we rode in a taxi through Sofia one afternoon this week. “He might slam on the breaks,” they warned, referring to the taxi-driver and worrying that I might be thrown through the windshield. I had taken the front seat, as I usually do when traveling, since the front seat usually has more support than those in the back. When I entered the cab, I saw on the dashboard two big signs, with the sign in English three times the size of the Bulgarian version. The English sign explained that the driver was obliged to put his id on the dashboard and that I, as a passenger, should ask for it. So I did. “Where is the id?” I inquired of the 30-something young man with an emerging beard. “It’s in the back,” he said and waived toward Alex and Francesco. I looked back and couldn’t see it. “No, it’s there,” the driver pointed to the glove compartment in front of my seat. I took the driver up on his invitation and opened the compartment to find only a car registration and similar documents. This is when Alex and Francesco started to worry. They explained later that they thought I might find a gun or narcotics and then we would all be in deep trouble.
The taxi industry in Sofia is famous for its poor regulation. In 2001, when I was there for two weeks, I discovered that some taxi companies impersonate others, using logos that look similar to reputable companies but charge rates that are four times higher. “Then the taxi industry was unregulated,” explained the officials from the Competition Commission in an earlier meeting. “Now it is properly regulated.” From a passenger’s perspective, it didn’t seem that they had improved all that much.
Having put on the seatbelt, I decided to test the credibility of government institutions for the man on the street--in this case, our taxi-driver. “What is your opinion about the government?” I asked. “They are all crooks. If I had a gun, I would kill 12,000 of them.” I was too stunned to ask why 12,000 but pleased to hear that he didn’t have a gun. I decided to keep probing. “You have an election in a few months. You can elect a new government.” “They are all the same,” was the response. He went on to explain that it was the same Communist-parties that controlled the country in 1989 before the Berlin Wall. It was also the same clans and in some case, the same individuals. “They all steal,” complained the driver, suddenly becoming law-abiding himself. “We are ready to march on the streets … anytime …”
By then, Francesco was getting very unnerved. “Here, here, please stop,” he impatiently instructed. The driver had to move to the curb and then get past the bus stop with its many waiting passengers. We then were obliged to walk several blocks in the rain to find our meeting since Francesco had cut the ride short.
It was a similar story last night in the hotel bar. When time is pressed, I often have a light salad as dinner in the bar late in the evening. It was the third or fourth time this week that I had ordered a Balkan Shopska Salad with wine and bread. The bartender with his colored earrings in both ears told me that he was studying economics at the university and was acting as a part-time adviser to the mayor of one of the towns. “We want to change everything,” he said. “Five years ago, the student town was clean. Now it is run by the mafia. They have drugs, prostitution, everything. We are ready to march in the streets,” suggesting that such public protests could solve the problems of organized crime in Bulgaria.
Organized crime even arose in one of our official meetings with government ministry counterparts. For one senior official, I gave my usual presentation of the need for simple consumer information, fair business practices, an efficient method of resolving consumer disputes, and a system of financial education. All this is part of our program on consumer protection and financial literacy. When I came to the discussion about out-of-court dispute resolution, he became incensed and defensive and said, “Everywhere in the world, they have these problems. It is not just in Bulgaria.” It took me a moment to realize that he thought I was suggesting the presence of organized crime in the financial sector.
Last Spring the European Commission halted disbursement of grants for Bulgaria, arguing that the problems of organized crime are so pervasive that the Commission could not be sure that some of the funds would be stolen. As governments worldwide are searching for new revenues to cover their deficits, a loss of funds (and international public criticism) has hit hard in Sofia.
In my travels, I have been in Tbilisi, Georgia and Kyiv, Ukraine as brave journalists wrote about government corruption and were subject to contract-style murder. Tens of thousands, including many from the professional middle-classes, braved snow and cold and police mistreatment to make a public statement. One can wonder if the same will come to Sofia.
In the meantime, I can only wonder about the restaurant that Francesco, Alex and I walked into another evening this week. It was in residential area and had only one partially hidden sign. Francesco was certain it was a restaurant and walked in. He and Alex checked to make sure that it was not a “gentlemen’s club”. It was not but it had no customers even at 8:30 in the evening. When we asked for the near-disco music to be turned down, it took three requests and still was louder than I wished. The staff hid in the kitchen and we had to find them to obtain service. They did their best to ignore us. My guess was that we had wondered into a private restaurant masquerading as a public facility open to the public. As I ate my puree potatoes made from a mix, I wondered why even criminals would not want well-prepared food.
In the meantime, I can only think about Georgi Markov, the famous Bulgarian dissident who is thought to have been killed by the Russian secret police. As confirmed by several high-profile defectors, Georgi Markov was stabbed by an umbrella with a ricin-coated pellet. Of all the countries in central Europe, only Bulgaria had such a famous story with ties to Russian secret police.
Sue
Tuesday, December 11, 2007
A Few Days in Vilnius, Lithuania
Vilnius, December 2007
Dear Family and Friends,
Greetings again from Vilnius. I am sitting in a Japanese restaurant
overlooking the town square and listening to two Russian men talk at
the next table. I was a little worried when I saw that my flight last
Friday was full of Russian businessmen intent on drinking their way
through the two hour flight from Moscow. They were so loud that I
eventually gave up my first row seat and headed for the back of
business class.
We had been late leaving. The Lithuanian crew noted that the flight
always departs late from Moscow. “The Russians are drinking,” she
explained. The comment didn’t seem entirely fair. For 20 minutes, the
Aeroflot ground crew had shouted “Vil-knee-yus? Vilnius?” verbally
assaulting every passenger who walked past the gate. It seemed that the
newly opened airport had no working announcement system. Even the woman
security officer did her best. “Where is your friend?” she asked me as
I lingered in the boarding area, not wanting to head for the unheated
transit bus until the last moment. “I have no friends,” I responded to
communicate that I was not traveling with the lost passenger but
feeling lonely in a cold Moscow airport on a Friday night.
The man who boarded 30 minutes late was no strappling boisterous
drinker. He looked more like a dark-skinned mine-worker from the
Russian Far East and he bowed his head as he entered the plane and
sought refuge in the back.
Lithuania was the first of the central European states to declare its
independence from mother Russia in 1990. Lithuania had had independence
from Russia during the period between the two world wars and fought to
regain its status as soon as the USSR started to collapse. However even
in 1993, I found that of the three Baltic countries—Latvia, Estonia and
Lithuania—it was the Lithuanians who most often wanted to speak through
an interpreter. I was surprised to find that even now, three years
after joining the European Union in 2004, some of my government
counterparts preferred to speak in Lithuanian than in English.
Trying to buy a SIM card for my cell phone was a similar experience.
The only store open late on a Saturday afternoon was a tech store,
where the sole sales person did not speak English and had trouble
figuring out what I thought were obvious hand signals. I showed her my
phone and said, “SIM card?” but she still failed to understand. Then I
took the phone apart and showed where there was no SIM card and finally
she understood. Then the difficulty was in buying extra minutes. I
usually buy an extra $20 in minutes at the same time as the card but my
communications skills failed me again. I approached a middle-aged
couple who entered the store and asked if they spoke English. “Yes, but
only English,” was the response. “Could you please help me buy a SIM
card?” I asked. “But we only speak English,” they repeated as I
realized that Lithuanian was not among their languages.
Finally I exited the store and looked for some teenagers to help me. I
found a beautiful 17-year-old who then dragged her three girlfriends
plus boyfriend into the store to help me. When we had trouble figuring
out my new cell number, she used my phone to call hers so that my
number would show up on her caller-id. In response to my questions, she
told me that she had just graduated from high school and hoped to study
medicine in university. She was clearly the leader of the group and
determined to help a stranger. Her friends soon grew impatient, but
still smiled until we finished the purchase of the card.
Vilnius is a lovely town. The old city has been renovated with
cobblestone streets that discourage car traffic. Blinking Christmas
lights in red and white decorate the trees and street-lamps. The city
needs only snow to make it magical.
Unfortunately I will not be here long enough to see it. I needed only
two days for my meetings and will fly to Brussels tomorrow. Will be
back in DC on Friday night.
Sue
Dear Family and Friends,
Greetings again from Vilnius. I am sitting in a Japanese restaurant
overlooking the town square and listening to two Russian men talk at
the next table. I was a little worried when I saw that my flight last
Friday was full of Russian businessmen intent on drinking their way
through the two hour flight from Moscow. They were so loud that I
eventually gave up my first row seat and headed for the back of
business class.
We had been late leaving. The Lithuanian crew noted that the flight
always departs late from Moscow. “The Russians are drinking,” she
explained. The comment didn’t seem entirely fair. For 20 minutes, the
Aeroflot ground crew had shouted “Vil-knee-yus? Vilnius?” verbally
assaulting every passenger who walked past the gate. It seemed that the
newly opened airport had no working announcement system. Even the woman
security officer did her best. “Where is your friend?” she asked me as
I lingered in the boarding area, not wanting to head for the unheated
transit bus until the last moment. “I have no friends,” I responded to
communicate that I was not traveling with the lost passenger but
feeling lonely in a cold Moscow airport on a Friday night.
The man who boarded 30 minutes late was no strappling boisterous
drinker. He looked more like a dark-skinned mine-worker from the
Russian Far East and he bowed his head as he entered the plane and
sought refuge in the back.
Lithuania was the first of the central European states to declare its
independence from mother Russia in 1990. Lithuania had had independence
from Russia during the period between the two world wars and fought to
regain its status as soon as the USSR started to collapse. However even
in 1993, I found that of the three Baltic countries—Latvia, Estonia and
Lithuania—it was the Lithuanians who most often wanted to speak through
an interpreter. I was surprised to find that even now, three years
after joining the European Union in 2004, some of my government
counterparts preferred to speak in Lithuanian than in English.
Trying to buy a SIM card for my cell phone was a similar experience.
The only store open late on a Saturday afternoon was a tech store,
where the sole sales person did not speak English and had trouble
figuring out what I thought were obvious hand signals. I showed her my
phone and said, “SIM card?” but she still failed to understand. Then I
took the phone apart and showed where there was no SIM card and finally
she understood. Then the difficulty was in buying extra minutes. I
usually buy an extra $20 in minutes at the same time as the card but my
communications skills failed me again. I approached a middle-aged
couple who entered the store and asked if they spoke English. “Yes, but
only English,” was the response. “Could you please help me buy a SIM
card?” I asked. “But we only speak English,” they repeated as I
realized that Lithuanian was not among their languages.
Finally I exited the store and looked for some teenagers to help me. I
found a beautiful 17-year-old who then dragged her three girlfriends
plus boyfriend into the store to help me. When we had trouble figuring
out my new cell number, she used my phone to call hers so that my
number would show up on her caller-id. In response to my questions, she
told me that she had just graduated from high school and hoped to study
medicine in university. She was clearly the leader of the group and
determined to help a stranger. Her friends soon grew impatient, but
still smiled until we finished the purchase of the card.
Vilnius is a lovely town. The old city has been renovated with
cobblestone streets that discourage car traffic. Blinking Christmas
lights in red and white decorate the trees and street-lamps. The city
needs only snow to make it magical.
Unfortunately I will not be here long enough to see it. I needed only
two days for my meetings and will fly to Brussels tomorrow. Will be
back in DC on Friday night.
Sue
Saturday, December 8, 2007
Moscow and Money
Moscow, December 2007
Dear Family and Friends,
This evening I was lying on the leather backseat of my driver’s new Accord, typing my memos, as we drove to the airport when I started thinking about Putin’s Russia and what I could tell you of my week in Moscow. This is my last trip of the year before I head out to California for Christmas.
My driver was a handsome 30-something Muscovite who is honest and works hard. Roman’s father, Slava, is also a driver for our staff. Slava had picked me up at Moscow’s Sheremetyevo Airport on Saturday afternoon the week before. “I am very glad to see you,” Slava said as I handed him my luggage cart just outside of the arrivals area. “Roman sends you hello,” Slava said with his hand on his heart. “Please give him my regards,” I responded a little formally after 14 hours of flying. Then I asked, “Is Roman married now?” “No,” was Slava’s response. “Girls only want to marry oligarchs.” That was how I felt about Moscow. It is all about money.
In the three years since last I was in Russia, Moscow has become prohibitively expensive. “What happened to the Moscow Hotel?” I had asked Slava as we drove into town. “It is gone,” he responded, “There are no more three-star hotels in Moscow.” Then we passed the new Ritz Carlton. “The minimum room there is Euros 800 per night,” Slava explained and shook his head. For those in their 50s who had never joined the Communist Party and who were too young to benefit from the transition to a market economy--for people like Slava--Moscow provides few opportunities. For his son Roman, who is determinately honest, it is little better.
I had gone to Moscow to help put together a new project on Financial Literacy, which was quickly becoming a project on Financial Literacy and Consumer Protection (the latter being my expertise.) With three years away from Russia, I felt that I needed time to figure out the new lay of the land. I convinced the project task manager to let me do a technical mission, where I could talk with middle-level officials and get a feel for what economic reform is possible in today’s Russia.
Three years ago, Putin was moving quickly to consolidate power. He changed the appointment of the Regional Governors from direct popular election by the local electorate to appointment by Putin and his administration. Then he took on Mikhail Khodorkovsky, the oligarch who had gained control of the oil giant, Yukos. After many suspect transactions that were thought to have benefited him personally by billions of dollars, Khodorkovsky had started to become transparent—or at least as transparent as any of the world’s new rich are. It was to no avail. Khodorkovsky had also started a political campaign for the Russian Presidency and was a serious threat to Vladimir Vladimirovich Putin.
Putin’s administration conducted a trial on trumped-up charges of tax evasion where Yukos was not permitted to even use its cash in the bank to pay the taxes that had been suddenly levied. Khodorkovsky was placed in a harsh prison despite his white-collar crime. The people who know him say that he will eventually finish his prison term and emerge as powerful an enemy of Putin as he was before entering prison. It was the Khodorkovsky trial that made me decide to give up on Russia. No work on corporate governance could make any difference in that environment.
But then last June, one of my colleagues heard about my work on financial consumer protection in Slovakia. At a happenstance meeting at the coffee bar on G Street in Washington, he asked me to help him on his Financial Literacy Project. I have almost no free time between now and next July but I still agreed. “It is Russia,” is the common refrain of those of us who seem not to be able to stay away. No other country in the world is quite so fascinating for those of us interested in economic change. The parliamentary elections this week spoke volumes. Putin’s party (United Russia) was elected with more than 60 percent of the vote. As one of my colleagues explained, “We knew United Russia would win. We just didn’t know if it would be by 64.3 percent or 63.7 percent. The margin could only be within one percent.” Putin ensured that the state-controlled media put out only one message (favoring him) and then he encouraged his local administration to make sure that 70 to 80 percent of the electorate voted (presumably for United Russia.)
The party now has sufficient control to revise the constitution—including the restrictions on two consecutive terms that now threaten Putin from remaining as President-for-Life.
Not just the intellectuals are upset about Putin’s total control over the Russian Government and its administration. The hotel’s restaurant staff told me that they voted for the Communist Party, which gained only 11 percent of the vote. “I wanted to vote for the opposition,” explained the maitre d’ in the restaurant. The administrative staff voted in the same way. In Putin’s Russia, only the former ruling Communists have a chance to provide any sort of opposition to his total control.
The problem is that the control is being used to benefit the small group of people around Putin—and ingrain, even more deeply than before, a culture of corruption as the only way to get things done.
At the Hyatt, the receptionist asked if I had my police registration on my person. “You must always carry it,” the beautiful young blonde instructed with some concern in her voice. “What happens if I don’t?” I asked to see what response would be forthcoming. “Then you must pay,” she replied calmly. “How much should I pay?” I asked to press the point. “I don’t know,” she responded trying to get out of the conversation. “Would 1,000 rubles be enough?” I asked, thinking that I always had the equivalent of $25 in my purse.” “I think so,” she said, “but you should always carry the paper in your passport.” I had the impression that it was not always so easy to bribe your way out of police violations. Maybe more money would be needed. It is the same answer for all violations of the law. “Then you must pay.” I began to be grateful that my driver’s car had red license plates, indicating diplomatic status and avoiding the question of whether I had kept my hotel registration with me at all times.
“All projects in Russia involve watches,” explained another colleague who supervises a capital markets project in Russia. “You need to be aware of the watches,” she noted again touching her own watch on her wrist.
The Moscow local staff tell me that such corruption has never been so rampant as it is now. We agreed that, in general, corruption tends not to correct itself. It just becomes more and more engrained in the culture.
This is Putin’s Russia. In the meantime, Roman and Slava live in the city that has become the most expensive in the world.
As for my work, on Wednesday I gave a 30 minute presentation to a group of senior officials where I talked about the findings of our reviews of consumer protection in financial services. Not just in Russia but throughout central and eastern Europe, rising house prices have caused a doubling of loans to households for mortgages. At the same time, banks have started lending for luxury appliances such as flat-screen TVs. In Russia, the banks most active in consumer lending are also those that hide their fee and commission structures. A loan at 29% soon becomes one at 90% per annum as borrowers realize the true cost of their borrowings. Last year, legislation to require lenders to disclose the true “effective” interest rate was killed in parliament by the banks, presumably those benefiting most from the high lending rates.
An issue of commercial fairness and transparency has become a hot political issue. A year ago, Putin instructed his government cabinet to review ways of improving financial literacy and banking practices—and the Finance Minister asked for help. My colleague has been focusing on teaching budget management to high school students but I suggested that we needed to look at the laws protecting consumers and see if they are working properly. We agreed that I should start my work by conducting a seminar on the findings from the work in Slovakia.
So for 30 minutes late on Wednesday afternoon this week, I talked to a group of senior government officials, two rival banking associations, and a foreign business association and two foreign financial institutions. Then for an hour, each proceeded to tell the audience what their organization was doing to promote financial literacy. Indeed it was hard to close the seminar even 30 minutes after the scheduled closing time. In the follow-on meetings, government and private sector officials were similarly enthusiast.
Over and over again, the key seminar participants and especially the finance ministry officials said how much they appreciated our involvement in this area. I am not accustomed to being so appreciated and wondered just what I was walking into. But it means that I will probably be back in Moscow before the snow melts, squeezing time from other assignments—because it is Russia.
One of my colleagues tried to get me encouraged. She pointed out how successful projects in Russia have launched many an international career. “And how will this help me on the beach in California?” I asked, thinking about my future retirement but knowing that I would find the energy to come back to beautiful Moscow, with its overpriced hotels, corrupt police, and women on the prowl for the money of oligarchs.
Sue
Dear Family and Friends,
This evening I was lying on the leather backseat of my driver’s new Accord, typing my memos, as we drove to the airport when I started thinking about Putin’s Russia and what I could tell you of my week in Moscow. This is my last trip of the year before I head out to California for Christmas.
My driver was a handsome 30-something Muscovite who is honest and works hard. Roman’s father, Slava, is also a driver for our staff. Slava had picked me up at Moscow’s Sheremetyevo Airport on Saturday afternoon the week before. “I am very glad to see you,” Slava said as I handed him my luggage cart just outside of the arrivals area. “Roman sends you hello,” Slava said with his hand on his heart. “Please give him my regards,” I responded a little formally after 14 hours of flying. Then I asked, “Is Roman married now?” “No,” was Slava’s response. “Girls only want to marry oligarchs.” That was how I felt about Moscow. It is all about money.
In the three years since last I was in Russia, Moscow has become prohibitively expensive. “What happened to the Moscow Hotel?” I had asked Slava as we drove into town. “It is gone,” he responded, “There are no more three-star hotels in Moscow.” Then we passed the new Ritz Carlton. “The minimum room there is Euros 800 per night,” Slava explained and shook his head. For those in their 50s who had never joined the Communist Party and who were too young to benefit from the transition to a market economy--for people like Slava--Moscow provides few opportunities. For his son Roman, who is determinately honest, it is little better.
I had gone to Moscow to help put together a new project on Financial Literacy, which was quickly becoming a project on Financial Literacy and Consumer Protection (the latter being my expertise.) With three years away from Russia, I felt that I needed time to figure out the new lay of the land. I convinced the project task manager to let me do a technical mission, where I could talk with middle-level officials and get a feel for what economic reform is possible in today’s Russia.
Three years ago, Putin was moving quickly to consolidate power. He changed the appointment of the Regional Governors from direct popular election by the local electorate to appointment by Putin and his administration. Then he took on Mikhail Khodorkovsky, the oligarch who had gained control of the oil giant, Yukos. After many suspect transactions that were thought to have benefited him personally by billions of dollars, Khodorkovsky had started to become transparent—or at least as transparent as any of the world’s new rich are. It was to no avail. Khodorkovsky had also started a political campaign for the Russian Presidency and was a serious threat to Vladimir Vladimirovich Putin.
Putin’s administration conducted a trial on trumped-up charges of tax evasion where Yukos was not permitted to even use its cash in the bank to pay the taxes that had been suddenly levied. Khodorkovsky was placed in a harsh prison despite his white-collar crime. The people who know him say that he will eventually finish his prison term and emerge as powerful an enemy of Putin as he was before entering prison. It was the Khodorkovsky trial that made me decide to give up on Russia. No work on corporate governance could make any difference in that environment.
But then last June, one of my colleagues heard about my work on financial consumer protection in Slovakia. At a happenstance meeting at the coffee bar on G Street in Washington, he asked me to help him on his Financial Literacy Project. I have almost no free time between now and next July but I still agreed. “It is Russia,” is the common refrain of those of us who seem not to be able to stay away. No other country in the world is quite so fascinating for those of us interested in economic change. The parliamentary elections this week spoke volumes. Putin’s party (United Russia) was elected with more than 60 percent of the vote. As one of my colleagues explained, “We knew United Russia would win. We just didn’t know if it would be by 64.3 percent or 63.7 percent. The margin could only be within one percent.” Putin ensured that the state-controlled media put out only one message (favoring him) and then he encouraged his local administration to make sure that 70 to 80 percent of the electorate voted (presumably for United Russia.)
The party now has sufficient control to revise the constitution—including the restrictions on two consecutive terms that now threaten Putin from remaining as President-for-Life.
Not just the intellectuals are upset about Putin’s total control over the Russian Government and its administration. The hotel’s restaurant staff told me that they voted for the Communist Party, which gained only 11 percent of the vote. “I wanted to vote for the opposition,” explained the maitre d’ in the restaurant. The administrative staff voted in the same way. In Putin’s Russia, only the former ruling Communists have a chance to provide any sort of opposition to his total control.
The problem is that the control is being used to benefit the small group of people around Putin—and ingrain, even more deeply than before, a culture of corruption as the only way to get things done.
At the Hyatt, the receptionist asked if I had my police registration on my person. “You must always carry it,” the beautiful young blonde instructed with some concern in her voice. “What happens if I don’t?” I asked to see what response would be forthcoming. “Then you must pay,” she replied calmly. “How much should I pay?” I asked to press the point. “I don’t know,” she responded trying to get out of the conversation. “Would 1,000 rubles be enough?” I asked, thinking that I always had the equivalent of $25 in my purse.” “I think so,” she said, “but you should always carry the paper in your passport.” I had the impression that it was not always so easy to bribe your way out of police violations. Maybe more money would be needed. It is the same answer for all violations of the law. “Then you must pay.” I began to be grateful that my driver’s car had red license plates, indicating diplomatic status and avoiding the question of whether I had kept my hotel registration with me at all times.
“All projects in Russia involve watches,” explained another colleague who supervises a capital markets project in Russia. “You need to be aware of the watches,” she noted again touching her own watch on her wrist.
The Moscow local staff tell me that such corruption has never been so rampant as it is now. We agreed that, in general, corruption tends not to correct itself. It just becomes more and more engrained in the culture.
This is Putin’s Russia. In the meantime, Roman and Slava live in the city that has become the most expensive in the world.
As for my work, on Wednesday I gave a 30 minute presentation to a group of senior officials where I talked about the findings of our reviews of consumer protection in financial services. Not just in Russia but throughout central and eastern Europe, rising house prices have caused a doubling of loans to households for mortgages. At the same time, banks have started lending for luxury appliances such as flat-screen TVs. In Russia, the banks most active in consumer lending are also those that hide their fee and commission structures. A loan at 29% soon becomes one at 90% per annum as borrowers realize the true cost of their borrowings. Last year, legislation to require lenders to disclose the true “effective” interest rate was killed in parliament by the banks, presumably those benefiting most from the high lending rates.
An issue of commercial fairness and transparency has become a hot political issue. A year ago, Putin instructed his government cabinet to review ways of improving financial literacy and banking practices—and the Finance Minister asked for help. My colleague has been focusing on teaching budget management to high school students but I suggested that we needed to look at the laws protecting consumers and see if they are working properly. We agreed that I should start my work by conducting a seminar on the findings from the work in Slovakia.
So for 30 minutes late on Wednesday afternoon this week, I talked to a group of senior government officials, two rival banking associations, and a foreign business association and two foreign financial institutions. Then for an hour, each proceeded to tell the audience what their organization was doing to promote financial literacy. Indeed it was hard to close the seminar even 30 minutes after the scheduled closing time. In the follow-on meetings, government and private sector officials were similarly enthusiast.
Over and over again, the key seminar participants and especially the finance ministry officials said how much they appreciated our involvement in this area. I am not accustomed to being so appreciated and wondered just what I was walking into. But it means that I will probably be back in Moscow before the snow melts, squeezing time from other assignments—because it is Russia.
One of my colleagues tried to get me encouraged. She pointed out how successful projects in Russia have launched many an international career. “And how will this help me on the beach in California?” I asked, thinking about my future retirement but knowing that I would find the energy to come back to beautiful Moscow, with its overpriced hotels, corrupt police, and women on the prowl for the money of oligarchs.
Sue
Sunday, September 23, 2007
Trusting Mothers-in-Law: Travels through Armenia and Azerbaijan
Istanbul, September 2007
Dear Friends and Family,
Greetings from Istanbul. I am on one of those crazy trips where I spend one week in Armenia, take all day to drive into neighboring Georgia (with a change of drivers and cars at the border) to fly into Azerbaijan with just one week in Baku before flying to Istanbul en route to Moldova.
Armenia and Azerbaijan remain locked in war (and thus do not have direct air connections). If the Azeri politicians were to give up Nagorno-Karabakh and the contiguous area with Armenia, they would divide their country in half—and leave an island of Azeris in Armenia. Similarly if the Armenian politicians were to give up the area, they would be accused of abandoning their own people. In the meantime, the two countries maintain a military and economic blockade against each other, which hurts landlocked Armenia far more than Azerbaijan, since Baku sits at the edge of the Caspian Sea.
Perhaps it is because Armenia is landlocked but to me, it is amazing that the Armenian Government supports the the push for transparency of ultimate beneficial owners of the corporate sector. (The Azeris also keen but not to same degree.) Presented to the parliament of Armenia has been legislation on a par with that of western European countries—at least on the issue of transparency of ownership and control of publicly traded companies. When I asked one of my colleagues how they could support such moves towards transparency when so much is under cover, he had a simple explanation. “It is the mothers-in law of Armenia who own the country. Everyone puts their mothers-in-law as the shareholders of their companies.” This is a solution reflecting Armenian social culture. It appears that Armenian mothers-in-law are highly trusted.
One of the reasons I so like Armenia is that the municipal authorities have preserved their historical buildings. Republic Square in Yerevan is one of the most beautiful public places in all the Caucasus. By contrast, Baku in Azerbaijan feels like a city under construction. As one drives in from the Baku airport, it is the number of partially-finished apartment buildings that astonishes the new visitor. From the executive lounge of my hotel, I counted 14 new apartment buildings near the waterfront and six were missing walls, and in some cases, their roof. No doubt, it is oil money that is fueling such expansion in residential construction. Azerbaijan enjoys not just substantial oil and gas reserves but also its central location on the Baku-Tbilisi-Ceyhan (BTC) pipeline, which was built to transport Kazakh oil and gas to the west without going through Russia. The Azeri economy has doubled in less than three years but the serious wealth is concentrated with just a few.
When I was last in Azerbaijan in 2005, the political-economic structure was in flux. The country’s founder had died and his son had been made president in an election that was criticized by the international community--but not too heavily. The problem was the son had not always been presidential material, and as they say, “when he was young and foolish, he was young and foolish,” similar to our own George W. Bush in his early years. As the story goes, the son of the Azeri president had lost ownership of the most prestigious hotel in a gambling contest. In anger, the father closed all casinos in the country to ensure that his son did not lose anything more—or so goes the popular story.
In 2005, the tycoons of Azerbaijan were realigning themselves with the new President. Other threats have also been eliminated. One of the members of the founder’s extended family had been trying to clean up government and force some transparency but he has now been jailed and thus taken out of power. A journalist was trying to investigate and write about government corruption but he was killed in a mafia-style murder.
Much of the story about local politics was confirmed by the director of one of the project implementation units for projects financed by the international community. He wouldn’t even talk to me in our car where the driver would hear. Instead we stood on a downtown street corner, where the cars blow their horns nonstop due to the poor traffic circulation.
The drivers of Baku have good reason to be upset. The littering of the city with apartment buildings has increased the number of cars on the road, of which over one-third seem to be silver Mercedes C and E class. The apartment blocks are built on streets with a single lane of traffic on each side and no parking in the building.
In early September, there was a political crisis as one of the new apartment buildings collapsed. It was not quite finished and so the collapse killed a few workers and interior designers but not a large number of people. The city officials were quoted in the local English-speaking paper as saying that they did not know that the building had been built, suggesting that the building had not been formally approved by municipal authorities.
However that building may not be the only one to fall. Most of the new construction is 17-20 stories high—even though Baku is part of a major earthquake zone that plagues the Caucuses and caused the Armenian tremblings of 1988. From the partly-built sites, it appears that most buildings have just a few steel bars placed among the bricks. Probably they should be using heavily reinforced steel in concrete.
The bigger problem is that, according to the talkative director, all the local construction companies are owned by government ministers. How do you sue your builder for negligence if he (or she) is also a minister of government and can make your life very difficult?
Perhaps it would be better if in Azerbaijan, the mothers-in-law were also the owners of the large companies and could take on ministers who failed to follow city building codes.
Sue
Dear Friends and Family,
Greetings from Istanbul. I am on one of those crazy trips where I spend one week in Armenia, take all day to drive into neighboring Georgia (with a change of drivers and cars at the border) to fly into Azerbaijan with just one week in Baku before flying to Istanbul en route to Moldova.
Armenia and Azerbaijan remain locked in war (and thus do not have direct air connections). If the Azeri politicians were to give up Nagorno-Karabakh and the contiguous area with Armenia, they would divide their country in half—and leave an island of Azeris in Armenia. Similarly if the Armenian politicians were to give up the area, they would be accused of abandoning their own people. In the meantime, the two countries maintain a military and economic blockade against each other, which hurts landlocked Armenia far more than Azerbaijan, since Baku sits at the edge of the Caspian Sea.
Perhaps it is because Armenia is landlocked but to me, it is amazing that the Armenian Government supports the the push for transparency of ultimate beneficial owners of the corporate sector. (The Azeris also keen but not to same degree.) Presented to the parliament of Armenia has been legislation on a par with that of western European countries—at least on the issue of transparency of ownership and control of publicly traded companies. When I asked one of my colleagues how they could support such moves towards transparency when so much is under cover, he had a simple explanation. “It is the mothers-in law of Armenia who own the country. Everyone puts their mothers-in-law as the shareholders of their companies.” This is a solution reflecting Armenian social culture. It appears that Armenian mothers-in-law are highly trusted.
One of the reasons I so like Armenia is that the municipal authorities have preserved their historical buildings. Republic Square in Yerevan is one of the most beautiful public places in all the Caucasus. By contrast, Baku in Azerbaijan feels like a city under construction. As one drives in from the Baku airport, it is the number of partially-finished apartment buildings that astonishes the new visitor. From the executive lounge of my hotel, I counted 14 new apartment buildings near the waterfront and six were missing walls, and in some cases, their roof. No doubt, it is oil money that is fueling such expansion in residential construction. Azerbaijan enjoys not just substantial oil and gas reserves but also its central location on the Baku-Tbilisi-Ceyhan (BTC) pipeline, which was built to transport Kazakh oil and gas to the west without going through Russia. The Azeri economy has doubled in less than three years but the serious wealth is concentrated with just a few.
When I was last in Azerbaijan in 2005, the political-economic structure was in flux. The country’s founder had died and his son had been made president in an election that was criticized by the international community--but not too heavily. The problem was the son had not always been presidential material, and as they say, “when he was young and foolish, he was young and foolish,” similar to our own George W. Bush in his early years. As the story goes, the son of the Azeri president had lost ownership of the most prestigious hotel in a gambling contest. In anger, the father closed all casinos in the country to ensure that his son did not lose anything more—or so goes the popular story.
In 2005, the tycoons of Azerbaijan were realigning themselves with the new President. Other threats have also been eliminated. One of the members of the founder’s extended family had been trying to clean up government and force some transparency but he has now been jailed and thus taken out of power. A journalist was trying to investigate and write about government corruption but he was killed in a mafia-style murder.
Much of the story about local politics was confirmed by the director of one of the project implementation units for projects financed by the international community. He wouldn’t even talk to me in our car where the driver would hear. Instead we stood on a downtown street corner, where the cars blow their horns nonstop due to the poor traffic circulation.
The drivers of Baku have good reason to be upset. The littering of the city with apartment buildings has increased the number of cars on the road, of which over one-third seem to be silver Mercedes C and E class. The apartment blocks are built on streets with a single lane of traffic on each side and no parking in the building.
In early September, there was a political crisis as one of the new apartment buildings collapsed. It was not quite finished and so the collapse killed a few workers and interior designers but not a large number of people. The city officials were quoted in the local English-speaking paper as saying that they did not know that the building had been built, suggesting that the building had not been formally approved by municipal authorities.
However that building may not be the only one to fall. Most of the new construction is 17-20 stories high—even though Baku is part of a major earthquake zone that plagues the Caucuses and caused the Armenian tremblings of 1988. From the partly-built sites, it appears that most buildings have just a few steel bars placed among the bricks. Probably they should be using heavily reinforced steel in concrete.
The bigger problem is that, according to the talkative director, all the local construction companies are owned by government ministers. How do you sue your builder for negligence if he (or she) is also a minister of government and can make your life very difficult?
Perhaps it would be better if in Azerbaijan, the mothers-in-law were also the owners of the large companies and could take on ministers who failed to follow city building codes.
Sue
Wednesday, March 7, 2007
Tajikistan: The Land of Buzkashi (Chasing a Goat)
Istanbul, March 2007
Dear Friends and Family:
Greetings from Istanbul. I started this morning at 3:30, waking up ahead of my alarm, fearing that I might miss my flight from Dushanbe to Istanbul--and be obliged to wait another three days for the next flight out of Tajikistan.
Tajikistan seems to be a country that belongs neither to Europe nor to Asia and until September 11, 2001 was forgotten by both. Even today, the local radar on www.weather.com shows weather patterns for Saudi Arabia rather than central Asia. Tajikistan borders Afghanistan to the south, China to the east, Uzbekistan to the north and Iran to the west. The capital, Dushanbe, is at the bottom of a valley with mountain ranges on all sides. Indeed the US military employs Tajik pilots for their flights in Somalia because the pilots are so accustomed to flying in difficult conditions with changing winds.
Starting in 2001, the developed world could no longer forget countries like Tajikistan. Hundreds of millions of dollars of aid are given by governments in the hope that economic development will prevent isolated countries from becoming failed states. The US provides almost $25 million a year just in advisors on legal enforcement. The Chinese Government has promised to provide $650 million, including the building a mountain road from Dushanbe into Uzbekistan. The Aga Khan Foundation has just built a major bridge into Afghanistan.
Tajikistan has three main industries: aluminum, cotton, and narcotics transit. The aluminum plant is a legacy from the Soviet period. It generates air pollution into Uzbekistan and consumes so much power that most of the country has no electricity all winter. Even Dushanbe suffers from regular power cuts. Furthermore the aluminum plant was the first facility seized by the current President when he crossed the Uzbek-Tajik border in 1992 with 300 men. As recently as three years ago, the plant is thought to have financed one of the government institutions, whose leader came to contest power with the President—and is now in jail on charges of corruption. The senior officials seem to prefer to choose in their inner circles those with criminal or corrupt backgrounds. It is very convenient. When they become popular and powerful, senior officials can dismiss them and press charges—and then take credit for cleaning out the government.
Cotton is a still more complex story. Two international cotton traders provided financing for the local cotton industry through a series of intermediaries. During the Soviet period, the cotton gins were used to siphon off profits. In other central Asia countries, theft from the cotton sector was accomplished by under-reporting the total cotton production. In Tajikistan, it was more subtle. The cotton gins underreported the throughput rate for cotton processing.
Today the gins are owned by 25 to 30 well-connected intermediaries that finance the local cotton farmers, with refinancing from the same two international traders. The local intermediaries provide seed, fertilizer and tractors (not necessarily at market prices) and are repaid through the production of raw cotton sold to the gunnery (also not necessarily at market prices.) A few bad crop years has put some 30,000 farmers in hock to what are essentially loan-sharks. The government and the local representatives of the international community have spent several years trying to figure out what to do. The plans seem to benefit the intermediaries. So my question, is who owns the intermediaries? That, it seems, is a tricky question but knowing who owns and controls the key economic facilities is essential in understanding a country’s economy.
Last Sunday, the group with whom I am traveling decided to go watch Buzkashi, which literally means goat-grabbing. In a crude form of polo, men riding on horses compete to pick up the carcass of a headless goat. Buzkashi is most commonly associated with Afghanistan but is a common form of competition throughout central Asia. Last Sunday, we arranged with a tour guide to watch the spectacle. It gave interesting insights into Tajik economic life--and how relationships determine one's success in business.
We watched as several hundred horsemen descended into a valley and prepared for the competition. It seems that Buzkashi has no rules, except that the riders are supposed to act on their own. Of course, they work in teams, with some riders protecting the route for the rider with headless-goat in his hands. These informal alliances are necessary to win the valuable prizes for picking up the headless goat and taking the carcass across the finish line. However there is no umpire, just a rider with a loudspeaker telling the crowd who has done what to whom and why all of this is for the greater glory of the Republic of Tajikistan.
The business world seems to be similar. The rules seem to be non-existent and their are no umpires. Informal alliances are critically necessary for survival. And they are very tight in Tajikistan.
In my travels, I have never before found myself receiving virtually no information from local officials. Usually there are some who are well-informed but not part of the inner group and willing to share their insights. In Tajikistan, it was primarily the well-funded international community who talked about who owned what. Only one local Tajik explained a few parts of the puzzle.
Much of my information came from the internet, which surprisingly the internet is not censored. Perhaps it doesn’t need to be. My impression, confirmed by resident expatriates, was that all our meetings were taped and the information relayed to our government counterparts.
This is Tajikistan. Virtually all economic activity eventually goes through the senior officials or their family members. In Dushanbe, all economic activity requires the informal support of the powers that be.
I found a blogger who said that his DVD store has been visited by a representative of the top brass. The rep explained that his DVD store was in competition with the daughter’s store and she would like him to close his shop. In his blog, the DVD store owner expressed appreciation that he had received a verbal warning. He was happy to close rather than have the store broken into and his inventory destroyed or still worse. When I relayed this story to residents of Dushanbe, to a person they agreed with the blogger—that he was lucky to have received verbal instructions to close his business.
Of course, the big business in Tajikistan is narcotics trafficking. Virtually all of the heroin consumed in Europe is thought to originate in Afghanistan and be transported across Tajikistan. In my travels, black market activities remain in the shadow, but they cast a long shadow—of businesses that are not present but should be.
Nevertheless on this trip, I found a Tajikistan quite different from the country I visited in June 2000. While stopping at red lights remains optional, most cars appear to obey traffic signals, particularly when the traffic police are present. My hotel did not have a tank in the driveway as it did in 2000. People walk on the street in the evening as they did not in 2000. Tap water is light brown rather than dark brown and I fell sick with dysentery and nausea only about five times in two weeks, rather than constantly.
However it is still a country in need of improvements. On the flight out of Dushanbe, I sat beside the representative for Colgate Palmolive, who said that business in Tajikistan was good but that it would remain a problem until people became accustomed to clean water. Only then would they recognize the need for good oral hygiene.
As for me, I am waiting for an international hotel chain to open in Dushanbe. Several five star hotels are rumored to be under construction, but they all require the approval of the mayor. With all land technically belonging to the state, local government officials wield great power. As one of my contacts explained, the top officials keep the mayor in power to show that if they were not there, the mayor would likely be in charge—and his tactics did not involve giving just verbal warnings to competitors. In the press, he is known as a narco-baron.
It was two weeks of asking lots of questions, protected by the international institution for which I work. I felt as if, just asking the questions of who owns and controls this company and that bank was shedding some light on a very opaque community.
Will fly back to DC in the morning but am planning to be back in central Asia before the summer begins in earnest.
Now the cleaning staff of my hotel is trying to dust the banisters and palisades and I must close.
Sue
Dear Friends and Family:
Greetings from Istanbul. I started this morning at 3:30, waking up ahead of my alarm, fearing that I might miss my flight from Dushanbe to Istanbul--and be obliged to wait another three days for the next flight out of Tajikistan.
Tajikistan seems to be a country that belongs neither to Europe nor to Asia and until September 11, 2001 was forgotten by both. Even today, the local radar on www.weather.com shows weather patterns for Saudi Arabia rather than central Asia. Tajikistan borders Afghanistan to the south, China to the east, Uzbekistan to the north and Iran to the west. The capital, Dushanbe, is at the bottom of a valley with mountain ranges on all sides. Indeed the US military employs Tajik pilots for their flights in Somalia because the pilots are so accustomed to flying in difficult conditions with changing winds.
Starting in 2001, the developed world could no longer forget countries like Tajikistan. Hundreds of millions of dollars of aid are given by governments in the hope that economic development will prevent isolated countries from becoming failed states. The US provides almost $25 million a year just in advisors on legal enforcement. The Chinese Government has promised to provide $650 million, including the building a mountain road from Dushanbe into Uzbekistan. The Aga Khan Foundation has just built a major bridge into Afghanistan.
Tajikistan has three main industries: aluminum, cotton, and narcotics transit. The aluminum plant is a legacy from the Soviet period. It generates air pollution into Uzbekistan and consumes so much power that most of the country has no electricity all winter. Even Dushanbe suffers from regular power cuts. Furthermore the aluminum plant was the first facility seized by the current President when he crossed the Uzbek-Tajik border in 1992 with 300 men. As recently as three years ago, the plant is thought to have financed one of the government institutions, whose leader came to contest power with the President—and is now in jail on charges of corruption. The senior officials seem to prefer to choose in their inner circles those with criminal or corrupt backgrounds. It is very convenient. When they become popular and powerful, senior officials can dismiss them and press charges—and then take credit for cleaning out the government.
Cotton is a still more complex story. Two international cotton traders provided financing for the local cotton industry through a series of intermediaries. During the Soviet period, the cotton gins were used to siphon off profits. In other central Asia countries, theft from the cotton sector was accomplished by under-reporting the total cotton production. In Tajikistan, it was more subtle. The cotton gins underreported the throughput rate for cotton processing.
Today the gins are owned by 25 to 30 well-connected intermediaries that finance the local cotton farmers, with refinancing from the same two international traders. The local intermediaries provide seed, fertilizer and tractors (not necessarily at market prices) and are repaid through the production of raw cotton sold to the gunnery (also not necessarily at market prices.) A few bad crop years has put some 30,000 farmers in hock to what are essentially loan-sharks. The government and the local representatives of the international community have spent several years trying to figure out what to do. The plans seem to benefit the intermediaries. So my question, is who owns the intermediaries? That, it seems, is a tricky question but knowing who owns and controls the key economic facilities is essential in understanding a country’s economy.
Last Sunday, the group with whom I am traveling decided to go watch Buzkashi, which literally means goat-grabbing. In a crude form of polo, men riding on horses compete to pick up the carcass of a headless goat. Buzkashi is most commonly associated with Afghanistan but is a common form of competition throughout central Asia. Last Sunday, we arranged with a tour guide to watch the spectacle. It gave interesting insights into Tajik economic life--and how relationships determine one's success in business.
We watched as several hundred horsemen descended into a valley and prepared for the competition. It seems that Buzkashi has no rules, except that the riders are supposed to act on their own. Of course, they work in teams, with some riders protecting the route for the rider with headless-goat in his hands. These informal alliances are necessary to win the valuable prizes for picking up the headless goat and taking the carcass across the finish line. However there is no umpire, just a rider with a loudspeaker telling the crowd who has done what to whom and why all of this is for the greater glory of the Republic of Tajikistan.
The business world seems to be similar. The rules seem to be non-existent and their are no umpires. Informal alliances are critically necessary for survival. And they are very tight in Tajikistan.
In my travels, I have never before found myself receiving virtually no information from local officials. Usually there are some who are well-informed but not part of the inner group and willing to share their insights. In Tajikistan, it was primarily the well-funded international community who talked about who owned what. Only one local Tajik explained a few parts of the puzzle.
Much of my information came from the internet, which surprisingly the internet is not censored. Perhaps it doesn’t need to be. My impression, confirmed by resident expatriates, was that all our meetings were taped and the information relayed to our government counterparts.
This is Tajikistan. Virtually all economic activity eventually goes through the senior officials or their family members. In Dushanbe, all economic activity requires the informal support of the powers that be.
I found a blogger who said that his DVD store has been visited by a representative of the top brass. The rep explained that his DVD store was in competition with the daughter’s store and she would like him to close his shop. In his blog, the DVD store owner expressed appreciation that he had received a verbal warning. He was happy to close rather than have the store broken into and his inventory destroyed or still worse. When I relayed this story to residents of Dushanbe, to a person they agreed with the blogger—that he was lucky to have received verbal instructions to close his business.
Of course, the big business in Tajikistan is narcotics trafficking. Virtually all of the heroin consumed in Europe is thought to originate in Afghanistan and be transported across Tajikistan. In my travels, black market activities remain in the shadow, but they cast a long shadow—of businesses that are not present but should be.
Nevertheless on this trip, I found a Tajikistan quite different from the country I visited in June 2000. While stopping at red lights remains optional, most cars appear to obey traffic signals, particularly when the traffic police are present. My hotel did not have a tank in the driveway as it did in 2000. People walk on the street in the evening as they did not in 2000. Tap water is light brown rather than dark brown and I fell sick with dysentery and nausea only about five times in two weeks, rather than constantly.
However it is still a country in need of improvements. On the flight out of Dushanbe, I sat beside the representative for Colgate Palmolive, who said that business in Tajikistan was good but that it would remain a problem until people became accustomed to clean water. Only then would they recognize the need for good oral hygiene.
As for me, I am waiting for an international hotel chain to open in Dushanbe. Several five star hotels are rumored to be under construction, but they all require the approval of the mayor. With all land technically belonging to the state, local government officials wield great power. As one of my contacts explained, the top officials keep the mayor in power to show that if they were not there, the mayor would likely be in charge—and his tactics did not involve giving just verbal warnings to competitors. In the press, he is known as a narco-baron.
It was two weeks of asking lots of questions, protected by the international institution for which I work. I felt as if, just asking the questions of who owns and controls this company and that bank was shedding some light on a very opaque community.
Will fly back to DC in the morning but am planning to be back in central Asia before the summer begins in earnest.
Now the cleaning staff of my hotel is trying to dust the banisters and palisades and I must close.
Sue
Saturday, November 4, 2006
Ukraine after the Orange Revolution
Ljubljana, November 2006
Dear Friends and Family,
It is very difficult to write to you about Ukraine, the final leg of my last trip. The trip was problematic and I came away with an unsettled feeling. Perhaps this note will give you enough information to explain why. I wrote part of this email two weeks ago on a United Airlines flight between Washington and San Diego, listening to New Age music. Tonight I find myself in Ljubljana, Slovenia, about to start another adventure and wanting to send you something before I delve into Slovenian issues.
To me, Ukraine is a place of ongoing corruption and deception. Two years ago, thousands marched in orange clothing and camped out in the snow for days on end to try to force Leonid Kuchma from the Presidency, They were fighting for a cleaner government—one that did not hire assassins to murder journalists investigating cases of government corruption. The protesters were not just students but also middle-aged professionals--senior staff from my local office and the Central Bank—all of whom who braved the cold for a new future. The Orange Revolution succeeded in forcing Kuchma out of power and electing their leader Viktor Yushchenko. But corruption and conflicts of interest still abound.
The presidential election was a bitter battle. Yushchenko accused Kuchma of using Ukraine’s secret service to try to assassinate him. Even today Yushchenko’s face is pock-marked from the poisons that the doctors in Vienna found in his body. Yushchenko wears the disfiguration as a badge of honor to show what he fought. As Yushchenko spoke during subsequent interviews, the attempted assassination sounded like the antics of the Russian secret service—similar to the accounts of Oleg Kalugin, a defected former senior officer of the Russian KBG, who in 1994 wrote, The First Directorate: My 32 Years in Intelligence and Espionage Against the West.
However to form a government, Yushchenko was obliged to rely on officials from Kuchma’s era. Yushchenko’s first prime minister was reform-oriented but had worked for Gazprom, one of the reputedly most corrupt companies in Russia. In the end, even she couldn’t hold the Government together and Yushchenko turned to Kuchma’s protégé (and his defeated presidential rival) to be his prime minister.
I hadn’t visited Ukraine since November 2002. I didn’t want to go again now but my colleagues cajoled and finally convinced me to try again to push for corporate governance reform. I reluctantly agreed but insisted that we stay at the only hotel with a swimming pool, the Premier Palace. (Due to hip problems, swimming is the only form of aerobic exercise permitted for me.)
When I arrived at the Premier Palace on a Sunday afternoon, I remembered that this was the hotel of the Ukrainian oligarchs. I felt as if I had come upon the wedding of Ukraine’s Mercedes-Benz dealer. About 30 black S-class Mercedes crowded the small street and the hotel’s doorman shooed us away. My driver, Oleg, had an Audi but we might as well as been in a Trabant, the old East German car that used to sell $1,500 and had no catalytic converter. Oleg drove around the corner and tried to park at the hotel’s casino. There security guards tried to shoo us away as well but Oleg got angry. He insisted that I was a hotel guest and needed to check into the hotel. Oleg and the casino security yelled at each other for a few minutes. Still screaming at the security guard, Oleg moved the orange cones, parked the car, and helped me take my bags inside the hotel..
Inside the Premier Palace, everything was different. The well-dressed front office clerks smiled as they assigned me a room. “No one knows whose wedding it is,” explained the porter who showed me to the room. This is the world of Ukraine. In America, a big sign would proclaim the names of the bride and groom, In Ukraine, the name of the wedding party is an official secret.
The rest of the week was not much better. In 2002, the oligarchs controlled the voting of the members of parliament. “Bought and paid for” was my description of the Verkhovna Rada (parliament) at the time. Now in 2006 the oligarchs sit in parliament directly—and they act as chairman of the key committees, such as budget and finance. They have discovered the benefits of parliamentary immunity: as long as they are elected representatives, they cannot be prosecuted for past breaches of the law.
So for a week, I talked about corporate governance with senior officials in the government ministries, the securities commission, and the think-tanks. We agreed that we should hold a workshop to disseminate a recent report prepared under my supervision. I explained to my colleagues that the only hope of legislative reform was to convince the key oligarchs that it would be in their best interest. It was a tough sell.
Two of the largest oligarchs are rumored to be interested in having their companies listed on the London Stock Exchange. (The European stock exchanges have become the favorite for eastern European companies, who do not want to have to meet the financial disclosure requirements of the US Sarbanes-Oxley Act.) Raising capital is far from the goals of such oligarchs. Their companies are largely cash generators (so called cash cows) and no expansion or modernization is planned. Instead the controlling shareholders are looking entirely for the prestige of being major players in the industrialized world. One of the two dominant oligarchs is the son-in-law of former President Kuchma and he left parliament when his father-in-law left power.
For a week I tried to meet with the two oligarchs, or at least their advisors. However in such a short period of time, it was impossible to meet with any but the senior staff member of one of the two. The staffer tried to convince me and my colleague how her oligarch was highly progressive and that he had hired McKinsey to reorganize his corporate structure. In preparation for a foreign listing, the company had started to prepare statements that claimed to follow international standards of accounting.
We asked for advice on a strategy to “reach out to the private sector.” She liked the idea of a workshop but had no suggestions on how to meet with the other oligarchs. She also noted that any interaction with one of the four most powerful would be “unpleasant.” In the press, he is quoted as saying that he pays neither his taxes nor his debts. His office reportedly has an aquarium where he adds predatory fish to watch them eat each other. He is also the primary opponent to any reform of Ukraine’s company law—and sits in parliament to make sure that no reform passes through.
The local think-tanks explained that there is still a lot of money to be divided up among the ruling oligarchs. A number of the major state companies have not yet been sold but privatization has been stalled with 70 percent of the population being strongly against it. The current Presidential administration talks about the need for effective and “pointed” reform; for fear that they will not be reelected if they cannot show economic improvements. My argument that week in Kyiv (or what used to be called Kiev) was that popular opposition to privatization was due to weak corporate governance—and parliamentary approval of a new company law was essential to improving corporate governance. But everyone nodded but explained that until the spoils had been divided among the oligarchs, these powerful interests would oppose any serious legislative reform.
Money seems to resolve many political problems in Ukraine. There’s a story that after the last election, the members of parliament could not agree as to who would chair which committees. Weeks passed and the 90 day constitutional deadline for forming a government approached. According to the story, $74 million in cash was brought to the floor of the Verkhovna Rada and placed on a table. The committee chairmen were named and the resulting debts were paid on the spot. The only good part of the story is the absence of murder and assassination as a method of ensuring that promises were kept.
Leaving the Premier Palace at the end of the week, I was grateful that no oligarch wedding was going on at the hotel. As Oleg and I drove out to the airport, I wondered just how much good a workshop could do—and why did I agree to go back to Kyiv in the middle of winter when the odds of success are so low. Within less than one generation, these oligarchs will likely be the Rockefellers and JP Morgans of Ukraine and Eastern Europe. I don’t believe that will happen during my lifetime, at least not in the four years before I plan to leave my current job. But now I have agreed to go back to Kyiv in January for the workshop and try anyway. I keep hoping that my analysis is wrong and that for the sake of Ukraine, its oligarchs will be ready to talk about serious corporate governance reform.
Sue
Dear Friends and Family,
It is very difficult to write to you about Ukraine, the final leg of my last trip. The trip was problematic and I came away with an unsettled feeling. Perhaps this note will give you enough information to explain why. I wrote part of this email two weeks ago on a United Airlines flight between Washington and San Diego, listening to New Age music. Tonight I find myself in Ljubljana, Slovenia, about to start another adventure and wanting to send you something before I delve into Slovenian issues.
To me, Ukraine is a place of ongoing corruption and deception. Two years ago, thousands marched in orange clothing and camped out in the snow for days on end to try to force Leonid Kuchma from the Presidency, They were fighting for a cleaner government—one that did not hire assassins to murder journalists investigating cases of government corruption. The protesters were not just students but also middle-aged professionals--senior staff from my local office and the Central Bank—all of whom who braved the cold for a new future. The Orange Revolution succeeded in forcing Kuchma out of power and electing their leader Viktor Yushchenko. But corruption and conflicts of interest still abound.
The presidential election was a bitter battle. Yushchenko accused Kuchma of using Ukraine’s secret service to try to assassinate him. Even today Yushchenko’s face is pock-marked from the poisons that the doctors in Vienna found in his body. Yushchenko wears the disfiguration as a badge of honor to show what he fought. As Yushchenko spoke during subsequent interviews, the attempted assassination sounded like the antics of the Russian secret service—similar to the accounts of Oleg Kalugin, a defected former senior officer of the Russian KBG, who in 1994 wrote, The First Directorate: My 32 Years in Intelligence and Espionage Against the West.
However to form a government, Yushchenko was obliged to rely on officials from Kuchma’s era. Yushchenko’s first prime minister was reform-oriented but had worked for Gazprom, one of the reputedly most corrupt companies in Russia. In the end, even she couldn’t hold the Government together and Yushchenko turned to Kuchma’s protégé (and his defeated presidential rival) to be his prime minister.
I hadn’t visited Ukraine since November 2002. I didn’t want to go again now but my colleagues cajoled and finally convinced me to try again to push for corporate governance reform. I reluctantly agreed but insisted that we stay at the only hotel with a swimming pool, the Premier Palace. (Due to hip problems, swimming is the only form of aerobic exercise permitted for me.)
When I arrived at the Premier Palace on a Sunday afternoon, I remembered that this was the hotel of the Ukrainian oligarchs. I felt as if I had come upon the wedding of Ukraine’s Mercedes-Benz dealer. About 30 black S-class Mercedes crowded the small street and the hotel’s doorman shooed us away. My driver, Oleg, had an Audi but we might as well as been in a Trabant, the old East German car that used to sell $1,500 and had no catalytic converter. Oleg drove around the corner and tried to park at the hotel’s casino. There security guards tried to shoo us away as well but Oleg got angry. He insisted that I was a hotel guest and needed to check into the hotel. Oleg and the casino security yelled at each other for a few minutes. Still screaming at the security guard, Oleg moved the orange cones, parked the car, and helped me take my bags inside the hotel..
Inside the Premier Palace, everything was different. The well-dressed front office clerks smiled as they assigned me a room. “No one knows whose wedding it is,” explained the porter who showed me to the room. This is the world of Ukraine. In America, a big sign would proclaim the names of the bride and groom, In Ukraine, the name of the wedding party is an official secret.
The rest of the week was not much better. In 2002, the oligarchs controlled the voting of the members of parliament. “Bought and paid for” was my description of the Verkhovna Rada (parliament) at the time. Now in 2006 the oligarchs sit in parliament directly—and they act as chairman of the key committees, such as budget and finance. They have discovered the benefits of parliamentary immunity: as long as they are elected representatives, they cannot be prosecuted for past breaches of the law.
So for a week, I talked about corporate governance with senior officials in the government ministries, the securities commission, and the think-tanks. We agreed that we should hold a workshop to disseminate a recent report prepared under my supervision. I explained to my colleagues that the only hope of legislative reform was to convince the key oligarchs that it would be in their best interest. It was a tough sell.
Two of the largest oligarchs are rumored to be interested in having their companies listed on the London Stock Exchange. (The European stock exchanges have become the favorite for eastern European companies, who do not want to have to meet the financial disclosure requirements of the US Sarbanes-Oxley Act.) Raising capital is far from the goals of such oligarchs. Their companies are largely cash generators (so called cash cows) and no expansion or modernization is planned. Instead the controlling shareholders are looking entirely for the prestige of being major players in the industrialized world. One of the two dominant oligarchs is the son-in-law of former President Kuchma and he left parliament when his father-in-law left power.
For a week I tried to meet with the two oligarchs, or at least their advisors. However in such a short period of time, it was impossible to meet with any but the senior staff member of one of the two. The staffer tried to convince me and my colleague how her oligarch was highly progressive and that he had hired McKinsey to reorganize his corporate structure. In preparation for a foreign listing, the company had started to prepare statements that claimed to follow international standards of accounting.
We asked for advice on a strategy to “reach out to the private sector.” She liked the idea of a workshop but had no suggestions on how to meet with the other oligarchs. She also noted that any interaction with one of the four most powerful would be “unpleasant.” In the press, he is quoted as saying that he pays neither his taxes nor his debts. His office reportedly has an aquarium where he adds predatory fish to watch them eat each other. He is also the primary opponent to any reform of Ukraine’s company law—and sits in parliament to make sure that no reform passes through.
The local think-tanks explained that there is still a lot of money to be divided up among the ruling oligarchs. A number of the major state companies have not yet been sold but privatization has been stalled with 70 percent of the population being strongly against it. The current Presidential administration talks about the need for effective and “pointed” reform; for fear that they will not be reelected if they cannot show economic improvements. My argument that week in Kyiv (or what used to be called Kiev) was that popular opposition to privatization was due to weak corporate governance—and parliamentary approval of a new company law was essential to improving corporate governance. But everyone nodded but explained that until the spoils had been divided among the oligarchs, these powerful interests would oppose any serious legislative reform.
Money seems to resolve many political problems in Ukraine. There’s a story that after the last election, the members of parliament could not agree as to who would chair which committees. Weeks passed and the 90 day constitutional deadline for forming a government approached. According to the story, $74 million in cash was brought to the floor of the Verkhovna Rada and placed on a table. The committee chairmen were named and the resulting debts were paid on the spot. The only good part of the story is the absence of murder and assassination as a method of ensuring that promises were kept.
Leaving the Premier Palace at the end of the week, I was grateful that no oligarch wedding was going on at the hotel. As Oleg and I drove out to the airport, I wondered just how much good a workshop could do—and why did I agree to go back to Kyiv in the middle of winter when the odds of success are so low. Within less than one generation, these oligarchs will likely be the Rockefellers and JP Morgans of Ukraine and Eastern Europe. I don’t believe that will happen during my lifetime, at least not in the four years before I plan to leave my current job. But now I have agreed to go back to Kyiv in January for the workshop and try anyway. I keep hoping that my analysis is wrong and that for the sake of Ukraine, its oligarchs will be ready to talk about serious corporate governance reform.
Sue
Wednesday, February 8, 2006
Fighting Corruption in Bahrain
Dear Friends and Family,
Greetings from Bahrain, the former financial center of the Middle East
and the first country in the Middle East to discover oil. This is the
first time that I have come to Bahrain, though for many years it was
one of those places I always wanted to visit.
Bahrain became famous in the late 1970s when the wealth of Beirut fled
Lebanon at the start of its civil war in 1974. At the time Bahrain was
a sleepy island, just off Saudi Arabia and the Government chose to use
liberalization of the financial sector and low taxes as a competitive
edge. By 1980, when I was a new recruit at Citibank in Toronto, oil
prices had quadrupled, Bahrain was a leading financial center in the
world, and the world’s financial elite worried if the petro-surpluses
had been properly recirculated through the international financial
systems. I used to practice saying the name of the country
(BACHK-er-rain) in the hope that one day I would visit.
I came to Bahrain for a conference on corporate governance--to deliver
a keynote speech, give a longer speech on corporate governance and then
chair a three hour session on government corruption. I thought that I
would visit the financial district and maybe the souk but nothing more.
Instead I learned about twenty years of politics in a Middle Eastern
capital.
My host, Mohammed, is a graying man in his 50s. He told me that he had
been fighting government corruption for 25 years but I didn’t really
believe him. I told Mohammed that I wanted to tour around and he offered
to be my tour guide. It took some time before Mohammed finished with all
his obligations to conference participants but by 4:30 this afternoon
we were driving on the causeway to Saudi Arabia, for which I have no
visa. Mohammed told me that his black Mercedes 450 SI was a perk that
came with being a Member of Parliament, much as did legal immunity. He
told me that he was worried that his term was coming to an end and that
his political enemies might use the loss of immunity to put him in
jail. His brother, now retired, had spent ten years in jail for
criticizing the Government, even though the law limited jail sentences
to just three years. His brother’s jail was on an island, much like
Alcatraz in San Francisco, except that the jail has been torn down and
one of the local wealthy families has taken over the island for their
family compound.
I knew that Mohammed came from a prominent family. For the opening
ceremonies of the conference, he wore a black robe with gold trim over
his white robe that most of the Middle Eastern men wear. It was not the
fine silk robe of a crown prince but it was certainly not the usual
kind of white robe that the functionaries wear.
When I asked Mohammed who were the prominent families of Bahrain, he
listed six families and then mentioned his own. His family was one that
had access to the ruling family but was not part of it.
As we drove on the causeway to Saudi Arabia, Mohammed told me that he too
had been in prison—not for years but for weeks. When I asked if he
still suffered from that experience, he pulled out a hammer and said
that he could not tolerate to be in a locked space—that he once cuts
his hands and arms struggling to escape a car that had been
accidentally locked by his brother.
Mohammed told me about a secret police as virulent as any in eastern Europe and
that he had lived in United Arab Emirates and Kuwait for 13 years. He
had been blackballed from work due to his anti-Government statements.
“Whatever they say against the [current] King, I do not agree,” Mohammed
exclaimed. “He closed the secret police.”
Mohammed and I stopped in his office so that he could pray and pick up
his airline tickets. Before leaving, Mohammed started giving me gifts. He
handed me a leather wallet from his cupboard of customer gifts. Then he
rolled up his prayer rug and put in a yellow plastic bag.
“I cannot accept,” I complained. “This is your prayer rug.” “You don’t
want it?” Mohammed asked. “I do want it. I like rugs, but it is yours.”
Mohammed insisted and I had to accept. When I returned to the hotel, I
found that it was a lightweight factory copy of a rug in beautiful
greens and blues. It is perfect for traveling and a lovely souvenir
from a very courageous man in Bahrain.
Am leaving for Dubai in the morning.
Sue
Greetings from Bahrain, the former financial center of the Middle East
and the first country in the Middle East to discover oil. This is the
first time that I have come to Bahrain, though for many years it was
one of those places I always wanted to visit.
Bahrain became famous in the late 1970s when the wealth of Beirut fled
Lebanon at the start of its civil war in 1974. At the time Bahrain was
a sleepy island, just off Saudi Arabia and the Government chose to use
liberalization of the financial sector and low taxes as a competitive
edge. By 1980, when I was a new recruit at Citibank in Toronto, oil
prices had quadrupled, Bahrain was a leading financial center in the
world, and the world’s financial elite worried if the petro-surpluses
had been properly recirculated through the international financial
systems. I used to practice saying the name of the country
(BACHK-er-rain) in the hope that one day I would visit.
I came to Bahrain for a conference on corporate governance--to deliver
a keynote speech, give a longer speech on corporate governance and then
chair a three hour session on government corruption. I thought that I
would visit the financial district and maybe the souk but nothing more.
Instead I learned about twenty years of politics in a Middle Eastern
capital.
My host, Mohammed, is a graying man in his 50s. He told me that he had
been fighting government corruption for 25 years but I didn’t really
believe him. I told Mohammed that I wanted to tour around and he offered
to be my tour guide. It took some time before Mohammed finished with all
his obligations to conference participants but by 4:30 this afternoon
we were driving on the causeway to Saudi Arabia, for which I have no
visa. Mohammed told me that his black Mercedes 450 SI was a perk that
came with being a Member of Parliament, much as did legal immunity. He
told me that he was worried that his term was coming to an end and that
his political enemies might use the loss of immunity to put him in
jail. His brother, now retired, had spent ten years in jail for
criticizing the Government, even though the law limited jail sentences
to just three years. His brother’s jail was on an island, much like
Alcatraz in San Francisco, except that the jail has been torn down and
one of the local wealthy families has taken over the island for their
family compound.
I knew that Mohammed came from a prominent family. For the opening
ceremonies of the conference, he wore a black robe with gold trim over
his white robe that most of the Middle Eastern men wear. It was not the
fine silk robe of a crown prince but it was certainly not the usual
kind of white robe that the functionaries wear.
When I asked Mohammed who were the prominent families of Bahrain, he
listed six families and then mentioned his own. His family was one that
had access to the ruling family but was not part of it.
As we drove on the causeway to Saudi Arabia, Mohammed told me that he too
had been in prison—not for years but for weeks. When I asked if he
still suffered from that experience, he pulled out a hammer and said
that he could not tolerate to be in a locked space—that he once cuts
his hands and arms struggling to escape a car that had been
accidentally locked by his brother.
Mohammed told me about a secret police as virulent as any in eastern Europe and
that he had lived in United Arab Emirates and Kuwait for 13 years. He
had been blackballed from work due to his anti-Government statements.
“Whatever they say against the [current] King, I do not agree,” Mohammed
exclaimed. “He closed the secret police.”
Mohammed and I stopped in his office so that he could pray and pick up
his airline tickets. Before leaving, Mohammed started giving me gifts. He
handed me a leather wallet from his cupboard of customer gifts. Then he
rolled up his prayer rug and put in a yellow plastic bag.
“I cannot accept,” I complained. “This is your prayer rug.” “You don’t
want it?” Mohammed asked. “I do want it. I like rugs, but it is yours.”
Mohammed insisted and I had to accept. When I returned to the hotel, I
found that it was a lightweight factory copy of a rug in beautiful
greens and blues. It is perfect for traveling and a lovely souvenir
from a very courageous man in Bahrain.
Am leaving for Dubai in the morning.
Sue
Wednesday, March 30, 2005
Dinner in a Bowling Alley in Moldova
Chisinau, March 2005
Dear Family and Friends,
Am writing to you from a bowling alley near my hotel in Chisinau, eating salmon steak and mashed potatoes and checking office email. Of the countries in the region, Moldova is becoming one of my favorites—and it is due to places like this restaurant. “Chicago” appears to be a restaurant but in fact is a multiplex bowling alley, with loud music playing disco music from the 70s. Chicago provides free wireless access to the internet—but not enough light for any but the best of my touch typing.
Those of us in the international community who travel to developing countries come to love places like Chicago. It is a place to watch the lives of the new rich. In developing countries, those at the top of the social and economic scales are all-powerful in their communities. There are few of the usual government rules in place and police can easily be influenced by cash, if municipal ordinances against noise and other restrictions have been violated. Apart from cities such as Moscow, the cost of living in developing countries is usually very low. Housekeepers and personal drivers are not expensive to hire and there is no requirement to fill in complex forms or pay social security taxes for household staff. The new rich seem to live a charmed life, particularly those are young and well-educated. They visit places like Chicago, both the city in the US and the restaurant in Moldova.
Here the bowlers are throwing fluorescent balls. They are mainly men, although a few women have forsaken their sexy stiletto heels and pointed toes for flat bowling shoes. The women are young, beautiful and skinny with lots of skin even on a cold near-winter night. But they aren’t prostitutes. Nor are the men the frightening thugs I saw on my first trip to Chisinau in 2004. I have changed hotels and with my new hotel, I have a new neighborhood.
Am now returning to you after checking office emails. I feel the buzz of heavy visual and aural stimulation. Am finding that the new rich also have a seamy side. The nearby table of a dozen 20-somethings of mixed company in genteel clothes has spawned another smaller table, mainly men in track suits and sneakers. After many years of travel in the region, I have come to the conclusion that in the countries of the former Soviet Union, the gyms and sports facilities were somewhat suspect. Even today, when I am obliged to go outside the hotel to find a fitness center, I find that the gyms are the places where thugs train and pump iron to be prepared to engage in less-than-polite conversation. The few women are generally under 25 years of age and act as if they were the girlfriends of the owner.
This bowling alley with its dominant males and alcohol and club music feels somewhat similar. There are no single women and the few who are here are attached to men in dumpy black shirts and slacks. The contrast is striking. The women are so beautiful that any in this bowling alley could be made up as a professional model. It is perhaps an indication of the different levels of economic power here that the women could be so enticing and the men so much less so.
Now dinner has finished and it is time to return to the hotel and prepare for another day of meetings.
Sue
Dear Family and Friends,
Am writing to you from a bowling alley near my hotel in Chisinau, eating salmon steak and mashed potatoes and checking office email. Of the countries in the region, Moldova is becoming one of my favorites—and it is due to places like this restaurant. “Chicago” appears to be a restaurant but in fact is a multiplex bowling alley, with loud music playing disco music from the 70s. Chicago provides free wireless access to the internet—but not enough light for any but the best of my touch typing.
Those of us in the international community who travel to developing countries come to love places like Chicago. It is a place to watch the lives of the new rich. In developing countries, those at the top of the social and economic scales are all-powerful in their communities. There are few of the usual government rules in place and police can easily be influenced by cash, if municipal ordinances against noise and other restrictions have been violated. Apart from cities such as Moscow, the cost of living in developing countries is usually very low. Housekeepers and personal drivers are not expensive to hire and there is no requirement to fill in complex forms or pay social security taxes for household staff. The new rich seem to live a charmed life, particularly those are young and well-educated. They visit places like Chicago, both the city in the US and the restaurant in Moldova.
Here the bowlers are throwing fluorescent balls. They are mainly men, although a few women have forsaken their sexy stiletto heels and pointed toes for flat bowling shoes. The women are young, beautiful and skinny with lots of skin even on a cold near-winter night. But they aren’t prostitutes. Nor are the men the frightening thugs I saw on my first trip to Chisinau in 2004. I have changed hotels and with my new hotel, I have a new neighborhood.
Am now returning to you after checking office emails. I feel the buzz of heavy visual and aural stimulation. Am finding that the new rich also have a seamy side. The nearby table of a dozen 20-somethings of mixed company in genteel clothes has spawned another smaller table, mainly men in track suits and sneakers. After many years of travel in the region, I have come to the conclusion that in the countries of the former Soviet Union, the gyms and sports facilities were somewhat suspect. Even today, when I am obliged to go outside the hotel to find a fitness center, I find that the gyms are the places where thugs train and pump iron to be prepared to engage in less-than-polite conversation. The few women are generally under 25 years of age and act as if they were the girlfriends of the owner.
This bowling alley with its dominant males and alcohol and club music feels somewhat similar. There are no single women and the few who are here are attached to men in dumpy black shirts and slacks. The contrast is striking. The women are so beautiful that any in this bowling alley could be made up as a professional model. It is perhaps an indication of the different levels of economic power here that the women could be so enticing and the men so much less so.
Now dinner has finished and it is time to return to the hotel and prepare for another day of meetings.
Sue
Friday, December 17, 2004
Tennis in Ahmedabad: Traveling as a Single Woman in India
Dear Family and Friends,
I think that even I have finally gone too far. I am sitting in the
Indian-Chinese restaurant of the local club to which my tennis pro
belongs. This is a family restaurant with tables of 8 and 12 people and
young children running on the tile floor. As I walked in and headed for
a booth, all of the 12 people at the long table turned to stare at me,
as if to ask just what a single white woman might be doing in this
restaurant. It was also my question.
Last summer, when I visited Lake Manitou in Ontario, I met a group of
very good tennis pros, all of whom came from the city of Ahmedabad in
northern India. They told me of their tennis facilities and suggested I
come to visit. In all their years at Manitou, many guests had
apparently said that they would come to visit, but none had—except for
me.
Ahmedabad is the fourth largest city in India, and the second most
properous in western India. It is an industrial city known for its
textiles—and I am finding, a level of pollution that exceeds that of
Delhi. Getting off the plane, none of the officials could believe that
I wanted to disembark here. They repeatedly asked me if I was going to
Bombay. “No, Ahmedabad” was my response.
My “world class” club has no bath but a shower that fails to drain
completely and thus attracts mosquitoes. When I arrived there were no
towels but after pointing out their absence to the reception, a man
with white towels on his left arm arrived. I was allocated one skimpy
large towel for the shower and another tiny towel for my hands. Lacking
a shower mat, I decided to reassign the hand towel to the role of a
mat. I can hear the conversation of the club staff and their television
through the walls as well as sounds of construction. Ahmedabad is in
the midst of a construction boom and from the pool, I can hear four
different construction programs underway.
The table of 12 has stopped staring at me but now I find out that the
state where Ahmedabad is located is a dry state and I can’t order a
beer. The local staff are doing their best to communicate with me but I
have not yet learned how to disentangle the Indian accent in
English—and I may be resigned to my meal of spinach and bean curds,
Indian Nan bread and Aquafina water. It would be nice to have something
more but I don’t know if this is the Palak Paneer that I ordered or if
it was just a complementary appetizer.
Now, more of the same has just arrived. I thought that I was just
saying yes to more Nan. This is rather like the early stages of
learning a new language. You never quite know what you ordered until it
arrives, and then you feel obliged to eat even if it wasn’t quite what
you wanted. There is only so much spinach I can eat without turning
green.
I am not sure quite what to do. TP, the tennis pro, implied that
he had used all his connections to get me a room at the club. He
explained that it is wedding season and so all the hotels are booked.
Also the Lion’s Club is having a conference in Ahmedabad as are some
5,000 physicians. I am supposed to stay in this club for two days and
then move to another “next door” for the balance of the week. I thought
it might be worthwhile to see if the other club also was undergoing
renovation.
I wandered up on the highway, past the camel hauling cargo, past the
trucks and the buses and the bicycles and the motorized rickshaws. The
first building was a restaurant catering to large parties and the next
still wasn’t a club. I had walked for almost 15 minutes and figured
that I had gone in the wrong direction. It turned out that “next door”
was two kilometers away or over a mile. I gave up but decided to see if
my club had internet facilities so that I could check out the option.
The library with its silenced cell phones had two computers but
terminals were not connected to the internet, or so explained the nice
man in the library, who went on to tell me that one of his sons worked
for Verizon and another was working on IT and living in Redwood City. A
lady listening to the conversation then offered me a ride to a cyber
café. She was walking with an older woman who seemed to be her mother.
She seemed so nice that I accepted the offer. We drove through the mass
of traffic, participating in the use of the horn as a means of friendly
communication. The traffic here seems to have several cadences.
Beep-beep. “Here I am,” says one horn. Another beeps in and out to say
that he is also there. A third just screams at a level pitch.
We finally found the internet café and I spent an hour looking for
alternative hotel accommodation in Ahmedabad. Nothing was available,
but even the Meridien was priced at about the same rate as the
club--$42 a night. Then I found a cellular provider whose prepaid SIM
cards would work both in Ahmedabad and Delhi and it was time to get
back to the club.
Several people had suggested that I use the “auto-rickshaws.” I found
one that sitting waiting for a fare and showed him the name of the
club, Rajpath Club. When I asked him if he knew where it was, he said
yes and then stopped to ask the market-sellers on the corner where the
club might be found. Finally we arrived, after driving through bumpy
streets with no springs or seatbelts or even doors. All I had was a bar
to hang on to, as the rickshaw forced his way into the oncoming traffic
and crossed three lanes. When we arrived, the driver announced the
price was 15 rupees, about 25 cents. He had duly checked his meter,
which looked more like a round scale for measuring weight than a taxi
meter for measuring distance.
Now it’s after midnight and I am lying on my bed, listening to the
horns and the loud conversations of the club staff as they walk past my
room. It’s going to be a long night and not one that will give me the
strength I need for the hours of tennis I want to play tomorrow.
December 20, 2004
After such a disastrous start, my trip to Ahmedabad has improved. After
being awakened at 4:30 am by the constant horns, I decided I had to
find alternative accommodation—or head to Delhi right away and camp out
in Dede’s apartment with its cook and houseman. However just calling
Delhi was likely to prove difficult. The staff at the front desk of the
club understood not a word of my requests. It would surely be difficult
to figure out the necessary dialing instructions. What was needed was
modern technology—a cell phone number.
I have been wandering through central Europe, the Caucasus and the
Middle East with my triband Nokia that I bought in Dubai last July.
TP was confused on the technology, but fortunately had provided a
car and driver for me during my stay. Laxman’s English was not much
better than that of the front office staff but I told him that I wanted
a prepaid SIM card and he was off and running. We tried two offices.
The first was Hutch (which is presumably a short form of Hutchinson,
the Hong Kong telecommunications company). I became nervous when I
found I could understand of the words emanating from the nice
receptionist. Her hand signals suggested that I should sit and wait.
But the room was full of people waiting and after five minutes, I
decided to try another carrier.
“Idea Cellular?” I asked Laxman, hoping he might know where the office
is located. At the cyber café from the previous evening, I had asked
the receptionist to write down the address for the other cellular
carrier. I handed the little piece of paper to Laxman but again
wondered about my decision-making. We drove through street after street
of people living in makeshift tents and water-buffalo roaming loose
rummaging through the street trash. Such slums were hardly the place
one expects to find a modern office building. And yet, we finally found
an Idea Cellular office with no one waiting and a receptionist that I
could understand. Twenty minutes later I was equipped with cellular
service that would allow me to call TP and my driver when he was
sleeping in the shade—and Delhi.
With success under my belt, I decided to see if I liked the second club
that I was supposed to move into the next day—if I could survive
another night in my dungeon. The second club, Konavrati, was an
improvement, still not a five-star hotel but it was a little further
from the highway and I found a front office clerk with whom I could
communicate. I asked if I could see the rooms and he showed me three
that were available that night. I chose the one with wood floors and
felt that I had climbed the affluence ladder since the new room had two
skinny white towels instead of just one.
My few days have since improved dramatically. That evening, I went out
for tea with TP and his wife and kids. When I returned, the Lions’
Club celebration that had taken so many rooms in the Club was hitting
its final notes. As I stood by the edge, a handsome 40-something man
invited in, past the security guards. I watched as women in saris and
men in suits danced in big groups and finally one of the men dragged me
into the dancing area and handed me two plastic sticks. To Hindi music,
he showed me a three-part dance where you hit your own sticks once and
then the other person’s sticks from one side and then the other. It was
an easy rhythm to follow and when the announcer asked for all the women
to come on to the stage, my dancing companions pushed me up the stairs.
The beautiful women in the saris were initially none too happy to have
among them a western woman in jeans and an African shirt that says “my
boy” on the back. However after a while, a couple of the women started
showing me some the dance moves and I found myself part of a big
circle, dancing towards the center and then out again. When it came
time for applause, I was at the far end and did a curtsey, which seemed
to be an appropriate ending.
When I came off the stage, I found the good-looking fellow and said to
him, “You are responsible for this,” with a smile. The other men with
whom I was dancing gave me their business cards and asked for my mobile
number, which I refused to divulge. The good-looking fellow tried the
hardest, though. It turned out that he was jewelry merchant and he
showed me his booth of beautiful gold and diamond necklaces. His six
friends stood grinning waiting to see what would happen. I wished them
a good night. My friend gave me his business card and a gift of a small
red jewelry pouch.
Another evening TP invited me to dinner with his sister and family
and they told me how various family members had 20 houses in a gated
community that the family members owned. “What happens if someone gets
divorced?” I asked. The property, of course, stayed with the man since
the definition of their family was through the male line.
In the meantime, TP's coaching of three hours a day has done
wonders for my tennis—and I found a huge supermarket where I could buy
accepted handsome and a full role of toilet paper. The Club is not
particularly quiet, but with earplugs I can sleep through the night and
the reception staff and I can share meaningful conversations on such
important issues as to whether the cleaning staff will still clean my
room that day. Night after night I watch as the Club hosts receptions
of hundreds of people. As TP's sister explained over dinner,
Ahmedabad society likes to enjoy all the celebrations—Christmas, the
new season and their Lord Krishna. They also don’t seem very stressed,
as if life is fairly easy for them. It is a very different life from
that of the ball kids who can’t afford shoes to protect their feet, or
the women construction workers in saris who carry heavy loads of cement
on their heads, or the gypsies who live by the highway in their
makeshift homes of old cloth and wood, or the passengers falling out of
crowded mechanized-rickshaws.
December 23, 2004
My final night in Ahmedabad is in a five-star hotel--the type that I
thought did not exist in the city—and lo and behold the computers in
the business center are using Windows XP.
Merry Christmas to all.
Sue
I think that even I have finally gone too far. I am sitting in the
Indian-Chinese restaurant of the local club to which my tennis pro
belongs. This is a family restaurant with tables of 8 and 12 people and
young children running on the tile floor. As I walked in and headed for
a booth, all of the 12 people at the long table turned to stare at me,
as if to ask just what a single white woman might be doing in this
restaurant. It was also my question.
Last summer, when I visited Lake Manitou in Ontario, I met a group of
very good tennis pros, all of whom came from the city of Ahmedabad in
northern India. They told me of their tennis facilities and suggested I
come to visit. In all their years at Manitou, many guests had
apparently said that they would come to visit, but none had—except for
me.
Ahmedabad is the fourth largest city in India, and the second most
properous in western India. It is an industrial city known for its
textiles—and I am finding, a level of pollution that exceeds that of
Delhi. Getting off the plane, none of the officials could believe that
I wanted to disembark here. They repeatedly asked me if I was going to
Bombay. “No, Ahmedabad” was my response.
My “world class” club has no bath but a shower that fails to drain
completely and thus attracts mosquitoes. When I arrived there were no
towels but after pointing out their absence to the reception, a man
with white towels on his left arm arrived. I was allocated one skimpy
large towel for the shower and another tiny towel for my hands. Lacking
a shower mat, I decided to reassign the hand towel to the role of a
mat. I can hear the conversation of the club staff and their television
through the walls as well as sounds of construction. Ahmedabad is in
the midst of a construction boom and from the pool, I can hear four
different construction programs underway.
The table of 12 has stopped staring at me but now I find out that the
state where Ahmedabad is located is a dry state and I can’t order a
beer. The local staff are doing their best to communicate with me but I
have not yet learned how to disentangle the Indian accent in
English—and I may be resigned to my meal of spinach and bean curds,
Indian Nan bread and Aquafina water. It would be nice to have something
more but I don’t know if this is the Palak Paneer that I ordered or if
it was just a complementary appetizer.
Now, more of the same has just arrived. I thought that I was just
saying yes to more Nan. This is rather like the early stages of
learning a new language. You never quite know what you ordered until it
arrives, and then you feel obliged to eat even if it wasn’t quite what
you wanted. There is only so much spinach I can eat without turning
green.
I am not sure quite what to do. TP, the tennis pro, implied that
he had used all his connections to get me a room at the club. He
explained that it is wedding season and so all the hotels are booked.
Also the Lion’s Club is having a conference in Ahmedabad as are some
5,000 physicians. I am supposed to stay in this club for two days and
then move to another “next door” for the balance of the week. I thought
it might be worthwhile to see if the other club also was undergoing
renovation.
I wandered up on the highway, past the camel hauling cargo, past the
trucks and the buses and the bicycles and the motorized rickshaws. The
first building was a restaurant catering to large parties and the next
still wasn’t a club. I had walked for almost 15 minutes and figured
that I had gone in the wrong direction. It turned out that “next door”
was two kilometers away or over a mile. I gave up but decided to see if
my club had internet facilities so that I could check out the option.
The library with its silenced cell phones had two computers but
terminals were not connected to the internet, or so explained the nice
man in the library, who went on to tell me that one of his sons worked
for Verizon and another was working on IT and living in Redwood City. A
lady listening to the conversation then offered me a ride to a cyber
café. She was walking with an older woman who seemed to be her mother.
She seemed so nice that I accepted the offer. We drove through the mass
of traffic, participating in the use of the horn as a means of friendly
communication. The traffic here seems to have several cadences.
Beep-beep. “Here I am,” says one horn. Another beeps in and out to say
that he is also there. A third just screams at a level pitch.
We finally found the internet café and I spent an hour looking for
alternative hotel accommodation in Ahmedabad. Nothing was available,
but even the Meridien was priced at about the same rate as the
club--$42 a night. Then I found a cellular provider whose prepaid SIM
cards would work both in Ahmedabad and Delhi and it was time to get
back to the club.
Several people had suggested that I use the “auto-rickshaws.” I found
one that sitting waiting for a fare and showed him the name of the
club, Rajpath Club. When I asked him if he knew where it was, he said
yes and then stopped to ask the market-sellers on the corner where the
club might be found. Finally we arrived, after driving through bumpy
streets with no springs or seatbelts or even doors. All I had was a bar
to hang on to, as the rickshaw forced his way into the oncoming traffic
and crossed three lanes. When we arrived, the driver announced the
price was 15 rupees, about 25 cents. He had duly checked his meter,
which looked more like a round scale for measuring weight than a taxi
meter for measuring distance.
Now it’s after midnight and I am lying on my bed, listening to the
horns and the loud conversations of the club staff as they walk past my
room. It’s going to be a long night and not one that will give me the
strength I need for the hours of tennis I want to play tomorrow.
December 20, 2004
After such a disastrous start, my trip to Ahmedabad has improved. After
being awakened at 4:30 am by the constant horns, I decided I had to
find alternative accommodation—or head to Delhi right away and camp out
in Dede’s apartment with its cook and houseman. However just calling
Delhi was likely to prove difficult. The staff at the front desk of the
club understood not a word of my requests. It would surely be difficult
to figure out the necessary dialing instructions. What was needed was
modern technology—a cell phone number.
I have been wandering through central Europe, the Caucasus and the
Middle East with my triband Nokia that I bought in Dubai last July.
TP was confused on the technology, but fortunately had provided a
car and driver for me during my stay. Laxman’s English was not much
better than that of the front office staff but I told him that I wanted
a prepaid SIM card and he was off and running. We tried two offices.
The first was Hutch (which is presumably a short form of Hutchinson,
the Hong Kong telecommunications company). I became nervous when I
found I could understand of the words emanating from the nice
receptionist. Her hand signals suggested that I should sit and wait.
But the room was full of people waiting and after five minutes, I
decided to try another carrier.
“Idea Cellular?” I asked Laxman, hoping he might know where the office
is located. At the cyber café from the previous evening, I had asked
the receptionist to write down the address for the other cellular
carrier. I handed the little piece of paper to Laxman but again
wondered about my decision-making. We drove through street after street
of people living in makeshift tents and water-buffalo roaming loose
rummaging through the street trash. Such slums were hardly the place
one expects to find a modern office building. And yet, we finally found
an Idea Cellular office with no one waiting and a receptionist that I
could understand. Twenty minutes later I was equipped with cellular
service that would allow me to call TP and my driver when he was
sleeping in the shade—and Delhi.
With success under my belt, I decided to see if I liked the second club
that I was supposed to move into the next day—if I could survive
another night in my dungeon. The second club, Konavrati, was an
improvement, still not a five-star hotel but it was a little further
from the highway and I found a front office clerk with whom I could
communicate. I asked if I could see the rooms and he showed me three
that were available that night. I chose the one with wood floors and
felt that I had climbed the affluence ladder since the new room had two
skinny white towels instead of just one.
My few days have since improved dramatically. That evening, I went out
for tea with TP and his wife and kids. When I returned, the Lions’
Club celebration that had taken so many rooms in the Club was hitting
its final notes. As I stood by the edge, a handsome 40-something man
invited in, past the security guards. I watched as women in saris and
men in suits danced in big groups and finally one of the men dragged me
into the dancing area and handed me two plastic sticks. To Hindi music,
he showed me a three-part dance where you hit your own sticks once and
then the other person’s sticks from one side and then the other. It was
an easy rhythm to follow and when the announcer asked for all the women
to come on to the stage, my dancing companions pushed me up the stairs.
The beautiful women in the saris were initially none too happy to have
among them a western woman in jeans and an African shirt that says “my
boy” on the back. However after a while, a couple of the women started
showing me some the dance moves and I found myself part of a big
circle, dancing towards the center and then out again. When it came
time for applause, I was at the far end and did a curtsey, which seemed
to be an appropriate ending.
When I came off the stage, I found the good-looking fellow and said to
him, “You are responsible for this,” with a smile. The other men with
whom I was dancing gave me their business cards and asked for my mobile
number, which I refused to divulge. The good-looking fellow tried the
hardest, though. It turned out that he was jewelry merchant and he
showed me his booth of beautiful gold and diamond necklaces. His six
friends stood grinning waiting to see what would happen. I wished them
a good night. My friend gave me his business card and a gift of a small
red jewelry pouch.
Another evening TP invited me to dinner with his sister and family
and they told me how various family members had 20 houses in a gated
community that the family members owned. “What happens if someone gets
divorced?” I asked. The property, of course, stayed with the man since
the definition of their family was through the male line.
In the meantime, TP's coaching of three hours a day has done
wonders for my tennis—and I found a huge supermarket where I could buy
accepted handsome and a full role of toilet paper. The Club is not
particularly quiet, but with earplugs I can sleep through the night and
the reception staff and I can share meaningful conversations on such
important issues as to whether the cleaning staff will still clean my
room that day. Night after night I watch as the Club hosts receptions
of hundreds of people. As TP's sister explained over dinner,
Ahmedabad society likes to enjoy all the celebrations—Christmas, the
new season and their Lord Krishna. They also don’t seem very stressed,
as if life is fairly easy for them. It is a very different life from
that of the ball kids who can’t afford shoes to protect their feet, or
the women construction workers in saris who carry heavy loads of cement
on their heads, or the gypsies who live by the highway in their
makeshift homes of old cloth and wood, or the passengers falling out of
crowded mechanized-rickshaws.
December 23, 2004
My final night in Ahmedabad is in a five-star hotel--the type that I
thought did not exist in the city—and lo and behold the computers in
the business center are using Windows XP.
Merry Christmas to all.
Sue
Wednesday, September 29, 2004
M6 and Macedonia after UN Sanctions: A Few Days in Skopje
Dear Friends and Family,
Greetings from Skopje. I am sitting in the bar of the Holiday Inn eating once more at 11pm, trying to relax after days and days of late nights and early mornings (at least early for me.)
It has taken me more than a week here to figure out how I felt about Skopje. It has been very unreal. Last week the hotel was full of Lieutenant-Colonels from the armies of the NATO of 2004—from Poland, Germany, Uzbekistan and many places in between. This week I see placards for a crisis planning meeting on WMD, which presumably refers weapons of mass destruction.
Macedonia presents itself as central European. The staff behind the front desk, the taxi drivers, the government ministers, they all look like central Europeans. Yet the city feels empty, not empty of people but empty of soul. Even the museums look like 1970s high schools built on three floors designed by a low-budget architect and built by a low-bidder construction company. The most interesting part of the city has Turkish influence. The most beautiful church is a mosque, down the street from the Turkish Embassy, where one of the men let me go in and watch the prayers. The interesting part of the old city is the Albanian section, which is also the place where there are few stores open. Yet the Ottoman Empire has not extended as far as Macedonia for the last four hundred years.
In the bars and the cafes, I listen to the conversations of foreigners—Americans, Swedish, Germans. Those not with the military seem to be working for NGOs. Some have escaped from Kosovo for a week-end of shopping, although to me the shops seem to be over-priced.
I am here with a large group of about 18 staff-members. My role is to identify ways in which we could assist the government in dealing with corporate governance issues. Unfortunately my key government counterpart, the head of the securities commission, has not yet found time to meet with me. She is very busy. Her job is part-time. She is also professor at the university. The seven commissioners represent 41 percent of the entire staff of the commission and they have trouble identifying priorities.
But then, they don't have too much to do. There is a stock exchange but it is not very active. If you offer to buy shares and you have not been pre-approved by company management, no one will sell you their shares. It's not part of the law. It is just part of the local business culture. Owning shares in a company is rather like becoming a member of a club. The existing members have to decide that you are ok before they will let you in. So much for liquid capital markets.
My local counterparts tell me that about 80 percent of the Macedonian economy is controlled by six men, known collectively as “M6.” There are some women in the next category, that I call the M20 but none among the key M6.
I met one of the M6 last week. His company is the second largest in the country. Yet no one could give me the street address.
The secretary to the bank manager who set up the meeting didn’t have the address. Our local office didn’t have it. The front desk of the Holiday Inn said that they didn’t have it and when I insisted they find it, they gave me the address of the company’s customs office on the outskirts of town. The taxi driver wasn’t certain where it was. Finally I insisted that the taxi driver help me.
He told me that I should walk on the street and ask for the “Lotteria,” the lottery, which is one of the company’s subsidiaries. I tried this but still had no success. Finally I gave up asking for the company name and started asking for the name of the big guy. (The names of all MG are well-known.) Everyone I asked knew where to find Mr. Lottery, even the construction workers fixing the gutters on the street.
I told Mr. Lottery this story. “Everyone thinks I own Macedonia,” he said and then complained that it wasn’t true, or maybe just partially. I then asked Mr. Lottery my standard question of who owned and controlled his company. He gave me an approximate answer, which I assumed covered only some of his businesses. I asked if the Macedonian business community would likely be willing to publicly provide the names of the "real owners" of their companies. "Yes, but not right away," was the answer from Mr. Lottery.
I sat in the meeting, wondering why so many local people were reluctant to tell me where to find the company. It was like asking where to find the Trump Tower and finding no New Yorker able to give you the address.
Macedonia has suffered from two blockades—the UN sanctions that closed the borders with Bosnia and Serbia during the Balkan War and the blockade from Greece. The UN sanctions were not Macedonia’s fault. The blockade with Greece was a different story. Greece complained that one its provinces is also called Macedonia and foreigners would be confused by the two Macedonia's. Officially Skopje is the capital of the Former Yugoslav Republic of Macedonia (described as FYR of Macedonia and pronounced as "FROM", rhyming with prom) and the Greek province kept its name. Perhaps no one explained that Moldova and Romania have the same problem and it doesn’t seem to be an issue.
However the impact on Macedonia was disastrous. Just after becoming a separate country, Macedonia found all of its border officially blocked. The businesses that survived were often “black”, criminal activities involved in smuggling of tobacco and oil derivatives.
The blockades ended by 1998 but by then, the Communist left-over party had been turned out and the new party wanted its share of the spoils. The major corporate governance abuses that I have discovered occurred between 1998-2002 when politicians established their personal fortunes for life. The former Communist party was reelected in 2002 and is still trying to find a workable economic development strategy. They know they have to include the 24 percent of the population classified as Albanian, but they have no strategies to achieve ethnic integration. Walking on the street, what I feel is the violence of a youth that has been abused.
My recommendations on corporate governance are likely to receive a polite but cool reception: require that owners of companies disclose their ownership positions, apply international standards to preparation of financial reports, make boards of directors effective supervisors of company management and provide some teeth for the securities regulator. It would be hard to believe that M6 wouldn’t oppose such recommendations and undermine their implementation, but I am convinced that such ideas that will one day find their way into Macedonia's business culture.
It’s now midnight and I am surrounded by locals—a table of eight men, several of which could be bodyguards of the old school (heavy-set and smoking) and two couples ignoring the bartender who seems determined to close on time.
Am off next to Romania, wondering if I will come back to Skopje and if it will be a very different place the next time.
Sue
Greetings from Skopje. I am sitting in the bar of the Holiday Inn eating once more at 11pm, trying to relax after days and days of late nights and early mornings (at least early for me.)
It has taken me more than a week here to figure out how I felt about Skopje. It has been very unreal. Last week the hotel was full of Lieutenant-Colonels from the armies of the NATO of 2004—from Poland, Germany, Uzbekistan and many places in between. This week I see placards for a crisis planning meeting on WMD, which presumably refers weapons of mass destruction.
Macedonia presents itself as central European. The staff behind the front desk, the taxi drivers, the government ministers, they all look like central Europeans. Yet the city feels empty, not empty of people but empty of soul. Even the museums look like 1970s high schools built on three floors designed by a low-budget architect and built by a low-bidder construction company. The most interesting part of the city has Turkish influence. The most beautiful church is a mosque, down the street from the Turkish Embassy, where one of the men let me go in and watch the prayers. The interesting part of the old city is the Albanian section, which is also the place where there are few stores open. Yet the Ottoman Empire has not extended as far as Macedonia for the last four hundred years.
In the bars and the cafes, I listen to the conversations of foreigners—Americans, Swedish, Germans. Those not with the military seem to be working for NGOs. Some have escaped from Kosovo for a week-end of shopping, although to me the shops seem to be over-priced.
I am here with a large group of about 18 staff-members. My role is to identify ways in which we could assist the government in dealing with corporate governance issues. Unfortunately my key government counterpart, the head of the securities commission, has not yet found time to meet with me. She is very busy. Her job is part-time. She is also professor at the university. The seven commissioners represent 41 percent of the entire staff of the commission and they have trouble identifying priorities.
But then, they don't have too much to do. There is a stock exchange but it is not very active. If you offer to buy shares and you have not been pre-approved by company management, no one will sell you their shares. It's not part of the law. It is just part of the local business culture. Owning shares in a company is rather like becoming a member of a club. The existing members have to decide that you are ok before they will let you in. So much for liquid capital markets.
My local counterparts tell me that about 80 percent of the Macedonian economy is controlled by six men, known collectively as “M6.” There are some women in the next category, that I call the M20 but none among the key M6.
I met one of the M6 last week. His company is the second largest in the country. Yet no one could give me the street address.
The secretary to the bank manager who set up the meeting didn’t have the address. Our local office didn’t have it. The front desk of the Holiday Inn said that they didn’t have it and when I insisted they find it, they gave me the address of the company’s customs office on the outskirts of town. The taxi driver wasn’t certain where it was. Finally I insisted that the taxi driver help me.
He told me that I should walk on the street and ask for the “Lotteria,” the lottery, which is one of the company’s subsidiaries. I tried this but still had no success. Finally I gave up asking for the company name and started asking for the name of the big guy. (The names of all MG are well-known.) Everyone I asked knew where to find Mr. Lottery, even the construction workers fixing the gutters on the street.
I told Mr. Lottery this story. “Everyone thinks I own Macedonia,” he said and then complained that it wasn’t true, or maybe just partially. I then asked Mr. Lottery my standard question of who owned and controlled his company. He gave me an approximate answer, which I assumed covered only some of his businesses. I asked if the Macedonian business community would likely be willing to publicly provide the names of the "real owners" of their companies. "Yes, but not right away," was the answer from Mr. Lottery.
I sat in the meeting, wondering why so many local people were reluctant to tell me where to find the company. It was like asking where to find the Trump Tower and finding no New Yorker able to give you the address.
Macedonia has suffered from two blockades—the UN sanctions that closed the borders with Bosnia and Serbia during the Balkan War and the blockade from Greece. The UN sanctions were not Macedonia’s fault. The blockade with Greece was a different story. Greece complained that one its provinces is also called Macedonia and foreigners would be confused by the two Macedonia's. Officially Skopje is the capital of the Former Yugoslav Republic of Macedonia (described as FYR of Macedonia and pronounced as "FROM", rhyming with prom) and the Greek province kept its name. Perhaps no one explained that Moldova and Romania have the same problem and it doesn’t seem to be an issue.
However the impact on Macedonia was disastrous. Just after becoming a separate country, Macedonia found all of its border officially blocked. The businesses that survived were often “black”, criminal activities involved in smuggling of tobacco and oil derivatives.
The blockades ended by 1998 but by then, the Communist left-over party had been turned out and the new party wanted its share of the spoils. The major corporate governance abuses that I have discovered occurred between 1998-2002 when politicians established their personal fortunes for life. The former Communist party was reelected in 2002 and is still trying to find a workable economic development strategy. They know they have to include the 24 percent of the population classified as Albanian, but they have no strategies to achieve ethnic integration. Walking on the street, what I feel is the violence of a youth that has been abused.
My recommendations on corporate governance are likely to receive a polite but cool reception: require that owners of companies disclose their ownership positions, apply international standards to preparation of financial reports, make boards of directors effective supervisors of company management and provide some teeth for the securities regulator. It would be hard to believe that M6 wouldn’t oppose such recommendations and undermine their implementation, but I am convinced that such ideas that will one day find their way into Macedonia's business culture.
It’s now midnight and I am surrounded by locals—a table of eight men, several of which could be bodyguards of the old school (heavy-set and smoking) and two couples ignoring the bartender who seems determined to close on time.
Am off next to Romania, wondering if I will come back to Skopje and if it will be a very different place the next time.
Sue
Thursday, May 27, 2004
Tennis in Prague in the Spring
Prague, May 2004
Dear Friends and Family:
Am staying in a hotel with tourists, lovers in their 60s and families with pre-teenage children in tow. Our group had trouble finding a business hotel with three available rooms for this last week in May, the only time when all three of us could come to Prague. Tonight, though, I am suffering from the flu and I begged off our formal dinner. I spent a few hours on email, took a warm bath and now am enjoying lobster bisque in the hotel’s bar with a glass of Czech cabernet sauvignon.
I am very happy in this bar. The walls are covered with black and white photographs of Prague in the 1930s and one can imagine the beauty and elegance of Prague in the pre-war years. The photographer seems to have preferred a particular street corner where pedestrians were more concerned with avoiding the deep puddles of water than in avoiding the lens of the camera.
It’s hard not to fall in love with Prague. It’s an old city, preserved by accidents of history where the old streets are still very narrow and maddeningly complicated. They were streets created by people who walked on rural paths until one day houses started to be built, and then rebuilt and then rebuilt.
However the legacy of the Soviet period is still evident in Prague. Many of the cities of central Europe benefited from being under Soviet influence. Some new buildings were built over the years but the old sections of the cities were protected from modern development. However the Soviet mentality was not always such a blessing.
Earlier this week when my room still had not been made up at 5pm, I called the hotel’s front desk. “I think that the maid has forgotten me,” I joked. “Didn’t you put up a paper?” the receptionist asked, initially suggesting that it was my fault that the room hadn’t been cleaned. Her remark was a hint of the former Soviet approach to customer service: the client is always at fault. It’s hard to believe such traces continue, even as the former Soviet hotels increased their prices from$1.25 a night (for bare-bones rooms in 1990) to $125 a night for the same rooms in the same hotels a year later to now $300 a night for very new hotels with very nice rooms. “Your room will be made up immediately,” the receptionist then responded, catching herself and following the contemporary mantra that the customer is always right.
However some of Prague's residents would prefer still more modernization. Last week-end after several desultory efforts, the hotel's front desk found a tennis coach with whom I could hit balls. Tomas is a bored (and single) civil engineer, who told me that he would rather spend his life teaching tennis than working as an engineer. He described Prague as a museum--an old town with no economic life. “Nothing is working in the Czech Republic,” he complained when I remarked that the temperatures at the end of May were still just above freezing. “Nothing is working here. Why should the weather be any better?”
At 40, Tomas is just a little too old to have benefited by the accession of the Czech Republic to the European Union this Spring. The economic reforms to permit accession to Europe brought Czech-land(as we used to call the Czech Republic) into conformity with all the rules and regulations of western Europe—but they haven't yet created a business environment with good jobs for this smart, single, energetic, and handsome 40-year-old from Prague who is still looking for love (and a good job) in all the wrong places.
Sue
Dear Friends and Family:
Am staying in a hotel with tourists, lovers in their 60s and families with pre-teenage children in tow. Our group had trouble finding a business hotel with three available rooms for this last week in May, the only time when all three of us could come to Prague. Tonight, though, I am suffering from the flu and I begged off our formal dinner. I spent a few hours on email, took a warm bath and now am enjoying lobster bisque in the hotel’s bar with a glass of Czech cabernet sauvignon.
I am very happy in this bar. The walls are covered with black and white photographs of Prague in the 1930s and one can imagine the beauty and elegance of Prague in the pre-war years. The photographer seems to have preferred a particular street corner where pedestrians were more concerned with avoiding the deep puddles of water than in avoiding the lens of the camera.
It’s hard not to fall in love with Prague. It’s an old city, preserved by accidents of history where the old streets are still very narrow and maddeningly complicated. They were streets created by people who walked on rural paths until one day houses started to be built, and then rebuilt and then rebuilt.
However the legacy of the Soviet period is still evident in Prague. Many of the cities of central Europe benefited from being under Soviet influence. Some new buildings were built over the years but the old sections of the cities were protected from modern development. However the Soviet mentality was not always such a blessing.
Earlier this week when my room still had not been made up at 5pm, I called the hotel’s front desk. “I think that the maid has forgotten me,” I joked. “Didn’t you put up a paper?” the receptionist asked, initially suggesting that it was my fault that the room hadn’t been cleaned. Her remark was a hint of the former Soviet approach to customer service: the client is always at fault. It’s hard to believe such traces continue, even as the former Soviet hotels increased their prices from$1.25 a night (for bare-bones rooms in 1990) to $125 a night for the same rooms in the same hotels a year later to now $300 a night for very new hotels with very nice rooms. “Your room will be made up immediately,” the receptionist then responded, catching herself and following the contemporary mantra that the customer is always right.
However some of Prague's residents would prefer still more modernization. Last week-end after several desultory efforts, the hotel's front desk found a tennis coach with whom I could hit balls. Tomas is a bored (and single) civil engineer, who told me that he would rather spend his life teaching tennis than working as an engineer. He described Prague as a museum--an old town with no economic life. “Nothing is working in the Czech Republic,” he complained when I remarked that the temperatures at the end of May were still just above freezing. “Nothing is working here. Why should the weather be any better?”
At 40, Tomas is just a little too old to have benefited by the accession of the Czech Republic to the European Union this Spring. The economic reforms to permit accession to Europe brought Czech-land(as we used to call the Czech Republic) into conformity with all the rules and regulations of western Europe—but they haven't yet created a business environment with good jobs for this smart, single, energetic, and handsome 40-year-old from Prague who is still looking for love (and a good job) in all the wrong places.
Sue
Saturday, May 22, 2004
The Hazards of Being a Woman in Moldova
From May 2004
Dear Friends and Family:
As I lie on my bed in the luxurious Renaissance Hotel in Prague, my memories of Chisinau are beginning to fade. Before losing them entirely, let me write to you about my travels.
In many ways, Moldova is a forgotten country. It lies on an inland strip between Romanian and Ukraine—abandoned by Romania but considered an agricultural backwater by Ukraine and the Russian orbit. Two million people, of which more than half live in abject poverty, constitute this quiet nation.
It feels as if Chisinau is in a time-warp, stuck in a time (as Russia was in 1995-96) when legitimate businesses and criminal syndicates were largely interchangeable. As one prominent expert explained last week, money-laundering is generally thought of criminal proceeds being invested in legitimate businesses. In Moldova, those who make money legitimately invest it in the underground economy—to take cash out of the country or just avoid burdensome taxation, which in some cases can exceed 150 percent of a company’s annual profit. But today’s Moldova, it’s impossible to separate the legitimate from the illegitimate.
I find highly work in corrupt countries to be exhausting for two reasons: (1) it’s difficult to obtain reliable information from official sources and (2) living conditions even in the best of local hotels are uncomfortable.
Regarding the quality of information, refusing to talk about the serious problems of the country seems to be a form of patriotism in Moldova. As an outsider, one needs to find out a certain base amount of information in order to show that one understands what’s going on. Only at that point can one be considered as an insider, worthy of hearing the true story. But that first piece of insight can be difficult to obtain—and it is only then that one can start working in earnest.
Nine banks have collapsed in Moldova, of which at least two have involved criminal charges of theft and fraud. Yet there are no stories in the international press. My interpreter was the only one who put the pieces together for me—and this only after two weeks of working together day after day.
Over coffee one morning, I asked her what her father’s profession had been. She confessed that she is the daughter of a famous Moldovan dissident, who went to jail and suffered physical abuses for his political views. Anna finally told me that her father had been good friends with Alan Ginsberg and other famous intellectuals of that period. But she also told me how upset her mother had become, having to raise her children without an accessible husband. He was in his element in jail, surrounded by other intellectuals who debated the important issues in the evenings. By contrast, her mother was shunned by their former friends, who would cross the street to avoid saying hello. Even with such a history, it took Anna days and days to tell me the true story of fraudulent activities in the banks.
In my analysis, I found that one-third of the Moldovan banking sector is controlled by business groups, mainly in off-shore zones for which virtually no information is publicly available. The controlled shareholder of at least one major bank has been subject to FBI investigations and, according to the press, is thought to have ties with Russian criminal groups. He was the same person who had owned, or perhaps continued to own, my hotel.
I definitely did not like my hotel. I arrived on a Wednesday almost three weeks ago and was upset to find that my room was almost directly above the kitchen and the bathroom had a small shower but no bathtub. I wandered around the hotel looking to see if there were any rooms that might be more pleasant for my stay. I started on the top floor but was uncomfortable having the maids watch my activities very carefully. (It turned out that the top floor was where the hotel’s owners conducted their business, or at least part of it.) I finally changed my room to get away from the hotel’s kitchen but couldn’t get a bathtub. And then I found that I wouldn’t have wanted to take a bath anyway. The water was both very hard and very brown and after two days had started to turn my chemically-treated hair into a shade of orange. By the end of the second week, the water situation got still worse: for hours we had no water at all. By then, I had stocked up on mineral water and was boiling mineral water for tea and using crystal water from the Carpathian mountains of Ukraine to wash my hair.
Working out at the hotel turned out to be difficult as well. The hotel’s publicity has beautiful photos of its facilities, complete with on-site trainer. This was a lie. The gym certainly had no trainer, just an elderly lady of the type that would used to survey each floor in a Soviet hotel. The gym’s machines, reputed to be of the highest quality, looked like the low-budget machines one might buy on the Home Shopping Channel. Walking on the treadmill caused it to sway from one side to another.
But then, the gym was not really intended for use by hotel guests. The second day after I arrived, I asked the front desk for directions to the gym. “It is occupated,” said the snippy woman behind the desk. It tuned out the gym had not only some workout equipment but also two easy-chairs (for the bodyguards) and a full formal dining-room (for the hosts and guests). The gym was used for private parties by those who insist on entertaining in a window-less dining-room located between the weight-machines and the swimming pool and sauna. In the Soviet era, the gyms were a center where criminal groups congregated—and according to the press, plan their activities. However in 2004, it’s hard to believe that a fitness center could be anything more than a place to work out.
Just as the hotel lied in their advertising, so the Government was less than accurate about its statistics. The official numbers are that the stock market capitalization is 18 percent of the Gross Domestic Product (GDP) but the stock exchange could not substantiate the number, which is more likely to be less than one percent of GDP—negligible was my description in my reports. Such deception makes me angry and forces me to check and recheck every piece of information that we receive.
To make life still worse, the two Sunday mornings that I was in Chisinau were full of very noisy celebrations. The first Sunday was Victory Day when the Soviets defeated the Nazis in 1945. Rockets were blasting before 8 am that morning. I wasn’t certain about the second Sunday, but by 9:00 am the park across from the hotel was full of marching bands with loud drums that made it difficult even to hear the T.V.
Observing daily life in Moldova also made me angry. In the evenings, as I waited for my dinner to be delivered, I watched night after night as the thugs and the prostitutes conducted their business in the hotel and the restaurants nearby. Moldova is the primary exporter of prostitutes into Russia and the activity is so pervasive that some seems seem as young as 15 or just 14. Prostitution is one of the primary sources of income for the local crime groups. The international press indicates that in Moldova, the market price to buy a woman (as a slave) is just $49. Nowhere else in eastern Europe is the value of a woman set so low.
My evening analyses gave me a chance to refine my analysis of how to identify a prostitute. If she is wearing a shirt, then the skirt’s side-slit (or even the entire skirt) must come to the panty-line. Jeans not only should be skin-tight, they should separate the two checks of the butt. Three-inch skinny heels are also a minimum requirement but behavior is probably the best indicator. Prostitutes in this part of the world seem to come in pairs. In bars, they sit at tables across from each other with a single drink or coffee in front of them for hours on end. But they don’t generally talk. They just sit at their table, watching their cell phones. Moldova has so many prostitutes that it’s possible to separate the amateurs from the pros. The amateurs talk among themselves and may be in groups of three or four. The amateurs will also reject an approaching male if he tries to touch one of them too early in the process. It is rumored that the current fiancée of one of America’s tycoons comes from Moldova—a beauty-queen by all accounts—but I wonder how one can come from such an environment and not be desperate for wealth.
I think that for women in poor countries, beauty is needed for economic survival and good looks are a commodity in which women invest money and time. Such emphasis on beauty turns out to be helpful for me. Days of internal anger and insufficient show their effects on my nearly 52-year-old face. As is my custom, I selected the woman at the front desk with the best skin and asked for her recommendation of a facialist. The best facialist in all Moldova was working in the hotel, I was informed.
When I arrived to visit the facialist (also called Anna), I told her that I was from Washington. She mentioned that one of her former students was in Washington and that I should visit her former student, Svetlana. After a few minutes, while Anna was doing the massage, I asked her for Anna’s last name. I couldn’t believe that Anna was referring to my facialist for the last ten years. Anna told me that she was Russian, from Moscow, and had never mentioned Moldova or other Soviet republics in all the years that we had discussed the former Soviet Union. At some point in her life, Svetlana was in Chisinau and had learned her trade from Anna, this 62-year-old lady working in a windowless basement in a hotel thought to be owned by mafia. Anna was very good. She told me her hand-made creams had won international awards and they proved to be better than the creams that I buy for $80 a bottle.
In Chisinau, I also found also the best tennis coach I have had in over five years. Viktor spoke only Russian, of which I know only a few words, but his hours of hitting with me gave new intensity to my tennis strokes. For $10 an hour, Viktor ran all over the court to give me perfect shots from which I could practice different strokes and strategies.
I don’t know if I will go back to Moldova again. I worked out some suggestions to deal with the worst of the corporate governance abuses—such as require that joint stock companies obtain an annual independent fraud and make the board of directors legally responsible if they fail to prevent fraud—but such innocuous recommendations threaten some powerful business interests that have the parliament well under their control.
Just in case, I visited all the other hotels in Chisinau to see if I could find one that was better managed than my hotel and I gave Anna and Anna and Viktor a big hug to say that I hoped I would return. If my ideas are accepted, they could make a difference in moving towards legitimate businesses. But that is a big “if”.
Sue
Dear Friends and Family:
As I lie on my bed in the luxurious Renaissance Hotel in Prague, my memories of Chisinau are beginning to fade. Before losing them entirely, let me write to you about my travels.
In many ways, Moldova is a forgotten country. It lies on an inland strip between Romanian and Ukraine—abandoned by Romania but considered an agricultural backwater by Ukraine and the Russian orbit. Two million people, of which more than half live in abject poverty, constitute this quiet nation.
It feels as if Chisinau is in a time-warp, stuck in a time (as Russia was in 1995-96) when legitimate businesses and criminal syndicates were largely interchangeable. As one prominent expert explained last week, money-laundering is generally thought of criminal proceeds being invested in legitimate businesses. In Moldova, those who make money legitimately invest it in the underground economy—to take cash out of the country or just avoid burdensome taxation, which in some cases can exceed 150 percent of a company’s annual profit. But today’s Moldova, it’s impossible to separate the legitimate from the illegitimate.
I find highly work in corrupt countries to be exhausting for two reasons: (1) it’s difficult to obtain reliable information from official sources and (2) living conditions even in the best of local hotels are uncomfortable.
Regarding the quality of information, refusing to talk about the serious problems of the country seems to be a form of patriotism in Moldova. As an outsider, one needs to find out a certain base amount of information in order to show that one understands what’s going on. Only at that point can one be considered as an insider, worthy of hearing the true story. But that first piece of insight can be difficult to obtain—and it is only then that one can start working in earnest.
Nine banks have collapsed in Moldova, of which at least two have involved criminal charges of theft and fraud. Yet there are no stories in the international press. My interpreter was the only one who put the pieces together for me—and this only after two weeks of working together day after day.
Over coffee one morning, I asked her what her father’s profession had been. She confessed that she is the daughter of a famous Moldovan dissident, who went to jail and suffered physical abuses for his political views. Anna finally told me that her father had been good friends with Alan Ginsberg and other famous intellectuals of that period. But she also told me how upset her mother had become, having to raise her children without an accessible husband. He was in his element in jail, surrounded by other intellectuals who debated the important issues in the evenings. By contrast, her mother was shunned by their former friends, who would cross the street to avoid saying hello. Even with such a history, it took Anna days and days to tell me the true story of fraudulent activities in the banks.
In my analysis, I found that one-third of the Moldovan banking sector is controlled by business groups, mainly in off-shore zones for which virtually no information is publicly available. The controlled shareholder of at least one major bank has been subject to FBI investigations and, according to the press, is thought to have ties with Russian criminal groups. He was the same person who had owned, or perhaps continued to own, my hotel.
I definitely did not like my hotel. I arrived on a Wednesday almost three weeks ago and was upset to find that my room was almost directly above the kitchen and the bathroom had a small shower but no bathtub. I wandered around the hotel looking to see if there were any rooms that might be more pleasant for my stay. I started on the top floor but was uncomfortable having the maids watch my activities very carefully. (It turned out that the top floor was where the hotel’s owners conducted their business, or at least part of it.) I finally changed my room to get away from the hotel’s kitchen but couldn’t get a bathtub. And then I found that I wouldn’t have wanted to take a bath anyway. The water was both very hard and very brown and after two days had started to turn my chemically-treated hair into a shade of orange. By the end of the second week, the water situation got still worse: for hours we had no water at all. By then, I had stocked up on mineral water and was boiling mineral water for tea and using crystal water from the Carpathian mountains of Ukraine to wash my hair.
Working out at the hotel turned out to be difficult as well. The hotel’s publicity has beautiful photos of its facilities, complete with on-site trainer. This was a lie. The gym certainly had no trainer, just an elderly lady of the type that would used to survey each floor in a Soviet hotel. The gym’s machines, reputed to be of the highest quality, looked like the low-budget machines one might buy on the Home Shopping Channel. Walking on the treadmill caused it to sway from one side to another.
But then, the gym was not really intended for use by hotel guests. The second day after I arrived, I asked the front desk for directions to the gym. “It is occupated,” said the snippy woman behind the desk. It tuned out the gym had not only some workout equipment but also two easy-chairs (for the bodyguards) and a full formal dining-room (for the hosts and guests). The gym was used for private parties by those who insist on entertaining in a window-less dining-room located between the weight-machines and the swimming pool and sauna. In the Soviet era, the gyms were a center where criminal groups congregated—and according to the press, plan their activities. However in 2004, it’s hard to believe that a fitness center could be anything more than a place to work out.
Just as the hotel lied in their advertising, so the Government was less than accurate about its statistics. The official numbers are that the stock market capitalization is 18 percent of the Gross Domestic Product (GDP) but the stock exchange could not substantiate the number, which is more likely to be less than one percent of GDP—negligible was my description in my reports. Such deception makes me angry and forces me to check and recheck every piece of information that we receive.
To make life still worse, the two Sunday mornings that I was in Chisinau were full of very noisy celebrations. The first Sunday was Victory Day when the Soviets defeated the Nazis in 1945. Rockets were blasting before 8 am that morning. I wasn’t certain about the second Sunday, but by 9:00 am the park across from the hotel was full of marching bands with loud drums that made it difficult even to hear the T.V.
Observing daily life in Moldova also made me angry. In the evenings, as I waited for my dinner to be delivered, I watched night after night as the thugs and the prostitutes conducted their business in the hotel and the restaurants nearby. Moldova is the primary exporter of prostitutes into Russia and the activity is so pervasive that some seems seem as young as 15 or just 14. Prostitution is one of the primary sources of income for the local crime groups. The international press indicates that in Moldova, the market price to buy a woman (as a slave) is just $49. Nowhere else in eastern Europe is the value of a woman set so low.
My evening analyses gave me a chance to refine my analysis of how to identify a prostitute. If she is wearing a shirt, then the skirt’s side-slit (or even the entire skirt) must come to the panty-line. Jeans not only should be skin-tight, they should separate the two checks of the butt. Three-inch skinny heels are also a minimum requirement but behavior is probably the best indicator. Prostitutes in this part of the world seem to come in pairs. In bars, they sit at tables across from each other with a single drink or coffee in front of them for hours on end. But they don’t generally talk. They just sit at their table, watching their cell phones. Moldova has so many prostitutes that it’s possible to separate the amateurs from the pros. The amateurs talk among themselves and may be in groups of three or four. The amateurs will also reject an approaching male if he tries to touch one of them too early in the process. It is rumored that the current fiancée of one of America’s tycoons comes from Moldova—a beauty-queen by all accounts—but I wonder how one can come from such an environment and not be desperate for wealth.
I think that for women in poor countries, beauty is needed for economic survival and good looks are a commodity in which women invest money and time. Such emphasis on beauty turns out to be helpful for me. Days of internal anger and insufficient show their effects on my nearly 52-year-old face. As is my custom, I selected the woman at the front desk with the best skin and asked for her recommendation of a facialist. The best facialist in all Moldova was working in the hotel, I was informed.
When I arrived to visit the facialist (also called Anna), I told her that I was from Washington. She mentioned that one of her former students was in Washington and that I should visit her former student, Svetlana. After a few minutes, while Anna was doing the massage, I asked her for Anna’s last name. I couldn’t believe that Anna was referring to my facialist for the last ten years. Anna told me that she was Russian, from Moscow, and had never mentioned Moldova or other Soviet republics in all the years that we had discussed the former Soviet Union. At some point in her life, Svetlana was in Chisinau and had learned her trade from Anna, this 62-year-old lady working in a windowless basement in a hotel thought to be owned by mafia. Anna was very good. She told me her hand-made creams had won international awards and they proved to be better than the creams that I buy for $80 a bottle.
In Chisinau, I also found also the best tennis coach I have had in over five years. Viktor spoke only Russian, of which I know only a few words, but his hours of hitting with me gave new intensity to my tennis strokes. For $10 an hour, Viktor ran all over the court to give me perfect shots from which I could practice different strokes and strategies.
I don’t know if I will go back to Moldova again. I worked out some suggestions to deal with the worst of the corporate governance abuses—such as require that joint stock companies obtain an annual independent fraud and make the board of directors legally responsible if they fail to prevent fraud—but such innocuous recommendations threaten some powerful business interests that have the parliament well under their control.
Just in case, I visited all the other hotels in Chisinau to see if I could find one that was better managed than my hotel and I gave Anna and Anna and Viktor a big hug to say that I hoped I would return. If my ideas are accepted, they could make a difference in moving towards legitimate businesses. But that is a big “if”.
Sue
Sunday, March 14, 2004
Restful Days in Djerba: Club Med Tunisia-Style
Djerba, March 2004
Dear Friends and Family:
It’s now almost ten days since I arrived at the Club Med in Djerba in Tunisia and I find myself wanting to stay longer. Days of little more than tennis and sun and eating and a lot of sleep have left me relaxed in a way that I haven’t felt in some years.
Some of my friends ask me why I choose to go to Club Med for solo vacations. It’s because such vacations are easy and provide virtually no reminders of the super-five star hotels that are my home while traveling on business. In Club Med, personal service is virtually non-existent. The towels are changed daily but the sheets are not. There is no welcoming fruit basket or bottle of wine. Indeed there is no fluffy white bathrobe or even a plastic shower cap in the bathroom or a notepad and pen by the telephone. But I like very much the simple low-maintenance architecture of Club Meds and the beauty of the beach and the gardens satisfies me. For me, it’s hard to beat a place that offers a cheap vacation of endless days, a quiet room, easy access to sports facilities and equipment, and no concerns about being harassed by men looking for women available for hire by the hour. Some places, such as this, I feel that I could have stayed a month.
I have the impression that many people come here time and again. Everyone I have met has visited Djerba at least three times in the past, and in one case, 25 times. For the most part, the guests are French couples in their 50s and 60s and 70s but some of the 30 somethings have brought their babies and toddlers. Many participate in the Club Med dances and games and routines. Most are friendly and courteous though critical of America and Americans.
I am reluctant to admit that I haven’t seen very much of Tunisia though, preferring late breakfasts over trips to neighboring cities. However one afternoon, I decided to adventure out. I rented a mountain bike and visited some of the coastal area of the island. I had done the same thing when I was last in Djerba, some eight years ago.
What I found was substantially more development, hotels and resorts specializing in the Senior Tour of German and sometimes French retirees than I had seen some years ago. However it’s not the same extensive development as is present around the Club Med in Agadir in Morocco. On the Tunisian coastal route, about half the cars seemed to be yellow taxis looking for customers. Not many private cars came by, and not one BMW or Audi or other expensive car. It is also not as conservative. In my afternoon on the Djerba roads, I saw not a single woman in a burqa. By contrast in Agadir in a similarly touristy area, at least one-third of the women was wearing one form or another of burqa.
Last evening was little different though. In the main restaurant was a large group of Tunisians, presumably new Tunisians of recently generated wealth. About 11:00 pm, as I was trying to write this note, I took a seat in the empty theater and soon found that a late night show had been planned. I stayed for the show but watched the Tunisians in their conservative dress that covers the neck and head and the arms to the wrists and the legs to the ankles. The show was clearly off-color and I understood very few of what were obviously very crude jokes. I turned to look at the reaction of a group of three Tunisian women in their fine silks. They had understood more than I. They looked displeased and I heard one say to the others in French that they should stay for one more skit and see if the quality improved. She smiled at me as she realized that I had overheard her comment. But the quality did not improve and they left a few minutes later. However the interesting part was that these modern Tunisian women would sit in a French-style café-theatre and watch the show. I didn’t see the same thing in Morocco.
As I was playing tennis this morning with one of the tennis pros, the village chief (chef de village) asked me if I didn’t want to stay. He said jokingly that he needed another tennis G.O. (as the staff are called). I have played so much tennis that I am referred to as “Champion” as often as I am called "Sue". It will be a tempting thought in May as I sit in my hotel room in Moldova, writing yet one more report for the home office.
Sue
Dear Friends and Family:
It’s now almost ten days since I arrived at the Club Med in Djerba in Tunisia and I find myself wanting to stay longer. Days of little more than tennis and sun and eating and a lot of sleep have left me relaxed in a way that I haven’t felt in some years.
Some of my friends ask me why I choose to go to Club Med for solo vacations. It’s because such vacations are easy and provide virtually no reminders of the super-five star hotels that are my home while traveling on business. In Club Med, personal service is virtually non-existent. The towels are changed daily but the sheets are not. There is no welcoming fruit basket or bottle of wine. Indeed there is no fluffy white bathrobe or even a plastic shower cap in the bathroom or a notepad and pen by the telephone. But I like very much the simple low-maintenance architecture of Club Meds and the beauty of the beach and the gardens satisfies me. For me, it’s hard to beat a place that offers a cheap vacation of endless days, a quiet room, easy access to sports facilities and equipment, and no concerns about being harassed by men looking for women available for hire by the hour. Some places, such as this, I feel that I could have stayed a month.
I have the impression that many people come here time and again. Everyone I have met has visited Djerba at least three times in the past, and in one case, 25 times. For the most part, the guests are French couples in their 50s and 60s and 70s but some of the 30 somethings have brought their babies and toddlers. Many participate in the Club Med dances and games and routines. Most are friendly and courteous though critical of America and Americans.
I am reluctant to admit that I haven’t seen very much of Tunisia though, preferring late breakfasts over trips to neighboring cities. However one afternoon, I decided to adventure out. I rented a mountain bike and visited some of the coastal area of the island. I had done the same thing when I was last in Djerba, some eight years ago.
What I found was substantially more development, hotels and resorts specializing in the Senior Tour of German and sometimes French retirees than I had seen some years ago. However it’s not the same extensive development as is present around the Club Med in Agadir in Morocco. On the Tunisian coastal route, about half the cars seemed to be yellow taxis looking for customers. Not many private cars came by, and not one BMW or Audi or other expensive car. It is also not as conservative. In my afternoon on the Djerba roads, I saw not a single woman in a burqa. By contrast in Agadir in a similarly touristy area, at least one-third of the women was wearing one form or another of burqa.
Last evening was little different though. In the main restaurant was a large group of Tunisians, presumably new Tunisians of recently generated wealth. About 11:00 pm, as I was trying to write this note, I took a seat in the empty theater and soon found that a late night show had been planned. I stayed for the show but watched the Tunisians in their conservative dress that covers the neck and head and the arms to the wrists and the legs to the ankles. The show was clearly off-color and I understood very few of what were obviously very crude jokes. I turned to look at the reaction of a group of three Tunisian women in their fine silks. They had understood more than I. They looked displeased and I heard one say to the others in French that they should stay for one more skit and see if the quality improved. She smiled at me as she realized that I had overheard her comment. But the quality did not improve and they left a few minutes later. However the interesting part was that these modern Tunisian women would sit in a French-style café-theatre and watch the show. I didn’t see the same thing in Morocco.
As I was playing tennis this morning with one of the tennis pros, the village chief (chef de village) asked me if I didn’t want to stay. He said jokingly that he needed another tennis G.O. (as the staff are called). I have played so much tennis that I am referred to as “Champion” as often as I am called "Sue". It will be a tempting thought in May as I sit in my hotel room in Moldova, writing yet one more report for the home office.
Sue
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