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Saturday, September 22, 1990 - Page updated at 12:00 AM

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Soviet Union's `Shadow Economy' -- Bribery, Barter, Black-Market Deals Are The Facts Of Life

Washington Post

MOSCOW - While the Soviet Union's legislators and theorists ponder the vistas of a revolutionary economic-reform program, the people of this country live like hunter-gatherers in a real-world economy that is half desert, half medieval bazaar.

The official structures of the Bolshevik experiment are collapsing with such finality, the state-run shops are so barren, that nearly everyone now must participate in the immense ``shadow economy'' of speculation and petty bribery, barter deals and black-marketeers.

President Mikhail Gorbachev has proposed sweeping economic change to a form of market economy - a measure the Supreme Soviet is scheduled to vote on Monday. But that's the future; for today, life for the average Soviet citizen is a struggle for survival.

The demands of the ``shadow economy'' trace a Soviet lifetime. A child comes into the world with the mother paying a 200-ruble bribe to the maternity nurse for a sterile needle and an anesthetic. When a Soviet citizen dies, relatives are overcome not only with grief but with the knowledge that they must pay thousands of rubles in bribes to the mortician, the coffin maker and the gravedigger.

What comes in between is an unending hustle. To buy a car means entering a world of markups in the thousands of rubles. A place in a good kindergarten requires 100 rubles - or better, $10 - slipped to the local school inspector. To find a pair of jeans or even the cheapest Western luxury inevitably means a trip to places such as Moscow's Vidnoye Market or Odessa's City Market, vast parking lots of primitive commerce that seem like market scenes in the paintings of Brueghel or Bosch. Crowds form around old women who sell shampoo, hairpins and lipsticks out of tattered plastic bags.

``In a way, this is the real economy, and it touches all of us, every day of our lives,'' said Yuri Shchekoshikin, a deputy in the national legislature who writes about the black market for the weekly Literaturnaya Gazeta.

Everyday survival here requires of everyone - from childhood to old age - a street savvy that makes life in the inner cities of the West seem innocent by comparison. Many older Soviet people say the situation is much like it was after World War II. Survival is a degraded art form requiring such skills as knowing under which bridge the black-market gasoline dealers operate on Tuesdays and what sort of Western chocolates to give a schoolteacher on a state holiday so that a child can get decent treatment in the coming semester.

Anatoli Golovkov, the resident expert on economics at Ogonyok magazine, said, ``There is nothing to buy through ordinary channels, but you can get anything you need if you are willing to play the game and pay big money. The whole process makes all of us cynical about the law and ourselves. It degrades us. But what's the choice?

``For example, say I have guests coming, and I need a cut of meat, a couple of bottles of booze and a carton of good cigarettes. There's really just one option. With a fistful of money, you go to one of the city markets. The state-run stalls are nearly empty. But you explain what you need to someone. He nods, and never saying a word, he writes down a price on a slip of paper and says, `Come back in an hour.' When you come back, the package is all wrapped up in a copy of Pravda and off you go.''

The demands of the ``shadow economy'' have no sense of propriety. Take the story of Irina, a young worker, who was faced last month with the immense task of putting together a funeral for her mother:

``Mother died, and I knew immediately this was going to run into big money for us. Soviet law guarantees that we all get a free funeral and burial. But that is a joke. The first stop was the bank. First, Mother's body had to be taken to the morgue. We were told that the morgues were all filled up, and they wouldn't take her. But when we paid 200 rubles to the attendants, they took her. Then there was the 50 rubles for her shroud.

``Then the funeral agent said he had no coffins my mother's size and that we could only buy something eight feet long. My mother was 5 feet tall. For 80 rubles he came up with the right size. Then the gravediggers said they could not dig the grave until 2 p.m. even though the funeral was at 10 a.m. So that took two bottles of vodka each and 25 rubles each. The driver of the funeral bus said he had another funeral that day, he couldn't take care of us. But for 30 rubles and a bottle of vodka, we could solve the problem. We did. And so on with the grave site and the flowers and all the rest. In the end, it took 2,000 rubles to bury my mother. Three months' income for the family.

``Is that what ordinary life is supposed to be? To me, it's like living by the law of the jungle.''

The law and its protectors are also involved in the web of survival. A few months ago, a Soviet traffic cop waved down a Western correspondent. The officer said the correspondent had been driving too fast and had to pay a 10-ruble fine on the spot. Using a time-honored method, the reporter collapsed into pidgin Russian and feigned incomprehension.

``Well, that's OK,'' said the cop, reaching into his coat pocket. ``Would you like to buy some good black caviar?''

There is nothing new about the black market in the Soviet Union. There have always been shortages - and then illegal dealers to fill the gap for the right price. The Soviet economy has never worked efficiently enough to put black-marketeers out of business. But talking about the black market was taboo. When Konstantin Simis, an attorney and professor of law until he emigrated to the United States in 1977, was working in Moscow on an early draft of his book ``U.S.S.R.: The Corrupt Society,'' the KGB confiscated the manuscript.

What was once heresy is now the conventional wisdom. In the text of presidential adviser Stanislav Shatalin's 500 Day economic-reform program, a section on the ``shadow economy'' admits that to some degree the black market has been a ``necessary adjunct'' to the old ``administrative-command'' system. It estimates that the ``shadow economy'' accounts for 15 or 20 percent of the gross national product.

Shatalin and other economists say that when a typical Soviet shopper cannot find, say, a pair of boots in the state-run shops and then is forced to pay 200 rubles on the black market, he is, in essence, paying a market price. The trouble is that the producers are getting no incentive to make more and better boots because all the profit is going into the pocket of the middleman. In the long run, Shatalin is hoping that the creation of real-market mechanisms will put black marketeers out of business. In the meantime, they thrive.

There are several levels of the ``shadow economy,'' ranging from the pure exploitation and manipulation of shortages by party bureaucrats to the ``half-legal'' workers who provide services that simply cannot be obtained on the legal, state market, from construction work to auto repair.

Excerpts from the working diary of a retired Soviet investigator published in the press here last month describe the origins in the mid-1960s of what is commonly known here as the ``trade mafia,'' a pyramid of payoffs that ranges from high-ranking Communist Party officials to butchers and bakers and gravediggers.

The author, Vladimir Oleinik, deputy chief of the Russian republic's investigation department, tells how a member of the party's Central Committee filled his bank account through bribes by manipulating various officials in the trade ministries. Places in the Moscow city trade ministry were evidently a seat of riches: they sold for 50,000 rubles.

The trade mafia works in ingenious ways. In Central Asia, sources described the ``fruit-juice scam.'' Workers pay enormous sums to get jobs servicing carbonated-juice machines throughout the southern republics. When they service the machines, they skimp on the syrup and sell it on the side. They also skim some of the money when they collect the thousands of kopeks in the machine. They use part of their gains to pay bribes to their foreman. From there the money goes all the way up the line, to party bureaucrats and party chiefs.

``A typical dishonest party official - and there are thousands of them - is making a pile of money,'' said Golovkov. ``Is there any wonder why the mainstream of the Communist Party resists the arrival of a market economy?''

``Look, it's very simple,'' said Andrei Fyodorov, the director since 1987 of the posh cooperative restaurant 36 Kropotkinskaya. ``The mafia is the state itself.''

For 25 years, Fyodorov worked in various state restaurants, mainly the Solechny. ``The game all started at 9 o'clock on Fridays when the inspectors came by,'' Fyodorov said. ``I soon realized they were not really interested in the state of things in the restaurant. Very soon we established good contact in terms of giving them different foodstuffs, providing tables in the restaurant, arranging saunas. The director of the restaurant would just tell me which services I had to arrange for them.''

``You see, every person working in services is always on a hook. The restaurant director's (monthly) salary is 190 rubles. You can't live on such money, and so he is forced to take bribes,'' Fyodorov said.

Fyodorov said he is watching the debate on switching to a market economy with some hope ``but mainly a lot of skepticism.'' He has come to believe in the ``ultimate tenacity'' of the system and doubts if an honest family trying to open its own store or restaurant will ever be able to survive.

Copyright (c) 1990 Seattle Times Company, All Rights Reserved.

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