I just returned from the most amazing trip, which included Moscow, Chiang Mai (the main city of northern Thailand), and Singapore. I have plenty to report, but today I want to focus on Russia – my first visit to this huge and important nation.
 
If you have read my other posts, you know I believe in knowing historical and geographical context. Without it, you cannot achieve wisdom. It is always where I start. So before I began this trip, I started studying up on Russian history and geography. Alongside those always come economics and politics. But history comes first. How can you hope to understand strongman leader Vladimir Putin – or any Russian – if you do not understand the world he grew up in, the world he comes from, the world that shaped his thinking?
 
My studies are always ongoing, but heightened intensively by visiting the place myself. I study a great deal beforehand, but even more after my visit. My Russian studies are incomplete, and I hope they remain so until the day I die, like all worthwhile studies. Learning is a journey, not a destination, although the landmarks and stops along the way can be significant. It will take me a while to digest and compare all the books and movies I have, and those still being shipped home from Russia; in a future post I will give you my recommendations.
 
I focused my pre-trip historical studies from about 1880 to 1980, from the last tsars through the later communist leaders like Leonid Brezhnev. From those studies, my other readings, the observations of fellow travelers (pun intended), and my own observations on this trip, I have discovered three Russias. I knew about the first two, but not the third, the one that surprised me, the Russia of today.
 
Russia number one was Soviet Russia, the “evil empire” that I grew up with in the 1950s and 1960s. Churchill remarked upon the enigma that Russia is, and I vividly remember coming to the same conclusion in 1964, when I was 13. All along I had been told that Nikita Khrushchev – who had been in complete power since 1956 – was a dictator, like his predecessor Stalin, his peer Mao, or the most famous of them all, Hitler. But then, in 1964, it hit the headlines that he was no longer the head man and another had taken his place. How could that be? How could you be a dictator and be fired? Something about my understanding was incomplete. I later came to understand how complex the power system was in post-Stalin Soviet Russia. 
 
Khrushchev, a fascinating man, was also the first ruler of Russia in a long time who was allowed to live at the end of his “term” – in fact he had pioneered the practice of not executing his political competition, at least not all of them.
 
Life in Soviet Russia, which lasted from the 1917 revolution led by Lenin, Trotsky, and others until sometime between the fall of the Berlin Wall in 1989 and the aborted coup attempt to overthrow Gorbachev in 1991, was nothing to write home about. The longest “serving” leader was Joe Stalin, who for about 30 years butchered millions of his fellow countrymen, starved others to death through ill-conceived economic master plans, and put millions more into the infamous “GULAG” work camps made most famous by award-winning writer Aleksandr Solzhenitsyn.  Even Lenin had said Stalin should not be allowed to be his successor, but Stalin was too tough, too strong, and too violent for others to overcome. Arch-rival Trotsky caught a fatal ice pick in Mexico City, years after he had fled Russia. 
 
It is amazing how the ideas of a few men like Marx and Engels could result in so much death and destruction. Stalin, Mao, and Cambodia’s Pol Pot made Hitler look like a small time mass murderer. While in Moscow I visited the GULAG memorial museum. I cannot show you the pictures as they are too disturbing.
 
After Stalin, Khrushchev “de-Stalinized” the nation. Stalin’s mummy was kicked out of the Kremlin where it had lain next to Lenin, the city named after him was renamed, and his statues and honors taken down. Actually the longest serving leader of post-tsarist Russia after Stalin was Leonid Brezhnev, at 18 years. Finally in the 1980s the GULAG was closed down. 
 
Perhaps post-Stalin Russia was a kinder, gentler nation, but still no one could vote, no one could be artistically or musically free, there was no freedom of the press, citizens could not travel within or beyond the nation, everyone was lied to about just about everything by their own government, and the individual consumer was last in line for everything. On this trip I met an Australian lady who had visited Moscow as a student in the 1970s and she told me that all the stories I had heard were true – on any given day, the biggest store in town would get a shipment of a single commodity, so that day you could get milk, for which you had to wait 3-6 hours in line. The next day it might be bread. Sometimes you would hire someone to wait in line for you. 
 
Of course the communist party bosses – a tiny percentage of the national population – could shop (alongside foreigners and diplomats) at a handful of restricted stores and dine at a few fancy restaurants. But the average citizen led a life of choiceless oppression (witness present day North Korea, a nation of slaves).
 
The leader who lasted longest in Soviet Russia, outside of Stalin, was Leonid Brezhnev, at 18 years from 1964 to 1982. He was best known for stability and a lack of change.
 
This is the Soviet world that was America’s most virile “competitor” for the duration of the cold war. And this is the Soviet world that began to come crashing down as satellite TV showed some Russians a different universe beyond their borders, and as more Russians were able to travel to Western Europe and witness such astounding sights as Kleenexes and entertainment and ownership of autos by people who weren’t bosses, even if they were tiny Volkswagens, Fiats, and Citroens. Gorbachev saw the change coming, and tried to adjust through Perestroika, but in 1991 the old guard attempted to overthrow him – that lasted less than a week – when Boris Yeltsin bravely rode the tanks and ultimately became the leader of a new Russia.
 
This new Russia, starting in the early 90s, was the second Russia I speak of. I did not see it myself, but eagerly asked every friend who visited about their impressions of the newly formed nation, no longer accompanied by a bevy of “Soviet socialist republics” and no longer master controller of Eastern Europe. What I heard about was a nation devoid of the most basic consumer services, a dreary place of Soviet style socialist apartment blocks (blame the architect Le Corbusier for some of that “inspiration”), a place where there were few restaurants but even in those, no one knew how to serve the customer. A place where no one would talk to you because they all still felt they were being watched – old habits are hard to break.
 
Often the contrast was made to China – where the entrepreneurs came out of the woodwork as soon as the curtain dropped – but then China was always the land of entrepreneurs, and they were only under Mao’s evil hand from the late 1940s until the 1970s, a far shorter period before Deng began their great rise towards capitalism. Other times the contrast was to the Czech Republic and Hungary, where there was a huge burst of enthusiastic capitalism as soon as they were out from under the Soviet stranglehold – but again, those people had never really signed up for Marxism and Leninism, and were brutally suppressed when they tried to revolt in the 1950s and 1960s.
 
This buzz was so strong, and I heard it from every traveler, that I even recall one young person coming up to me after a speech I made and saying, “I want to work in Eastern Europe, what do you think about Russia,” and I said, “I would stay away from there, sounds like they have a very long way to go, you should check out Poland or Estonia or Hungary or the Czech Republic instead.” How wrong I was, at least now with another ten years of history to help my understanding.
 
Because the Russia I saw two weeks ago, the third Russia, is an altogether different nation from the two Russias described above.
 
I was able to spend four nights and three full days in Moscow, which is typical for me on a first visit to a new city. I try to get a lot done and see and observe a lot. I take thousands of pictures and hours of time-lapse video, some of which I hope to post on the website once I get around to editing. Here are my primary initial observations:
 
First, you won’t be surprised that, for me, a key measure of a nation is the strength of their bookstore industry. Countries with a future are countries with high literacy and a lot of reading. Underdeveloped, poor countries have very small bookstands only in luxury hotels, and perhaps a few used bookstores. Over time they improve – a process I have observed closely in Mexico and parts of Asia over the last 20 years. 
 
Moscow’s bookstores are fantastic! I visited several stores, three of which I would guess do over $20 million a year in revenues – a level achieved by perhaps only 20 or so American bookstores, if that many. The stores carried massive selections – sometimes over 100,000 titles, and they were mobbed. Every imaginable subject was covered, and I didn’t see any signs of censorship.  These people are readers.
 
As a specific example, I went looking for a Russian road atlas, a book of maps covering every village in the land. In many countries there is no good national road atlas – Costa Rica is an example of a relatively advanced country where the road atlases are still poor. Being a large country, and one in which domestic tourism was previously weak or unknown, I did not expect to find much. Lo and behold, I found a plethora of road atlases from numerous publishers, with excellent covers, great cartography, and fine detail. The kind of quality I would expect in Western Europe, not in Russia.
 
But retailing, for better or worse, is more than just bookstores! Moscow, a giant city of over 10 million people, was chock full of Starbucks and Russian versions of Starbucks (or Panera Bread lookalikes) which had excellent food and service. They were on every corner, in every neighborhood. The overall diversity of retailing was astounding, although I did not have a chance to check to see if the mass merchants (like the US’s Wal-mart, France’s Carrefour, or England’s TESCO) had arrived – companies which will do much more good for the “average Jane” than the Levi, Prada, Sony, and Rolex shops which are often the first to arrive as capitalism hits a nation.     
 
The overall feel of the city, the pace and dress of the people, was not unlike any big Western European city, say Berlin. Their metro is one of the busiest in the world, and it is spotless, beautifully decorated (thank Joe Stalin for that), and runs on time. The ticketing system is more advanced than most US systems, more in line with what one sees in Singapore. New buildings and apartments arise everywhere, and there are plentiful hotels and restaurants. The food was far better than I would have ever guessed. It is an expensive hotel city, but you can eat pretty cheap on the streets or at family cafeteria-style restaurants like Moo Moo if you so desire.
 
I saw almost no one smiling, and was unable to get even museum workers to return my smile. So I think there is still a lot of tension there, but maybe no less smiling than you would find in other big “world cities.” Maybe my impression was just in contrast to Thailand, which I visited later on the same trip, which is the most warmly smiling place on earth.
 
So my bottom line, from my street-level observation, is that Russia is really happening, that it is on a roll. A far cry from Russia number two and a further cry from Russia number one.
 
This impression gets stronger if I read and study the data. As the world’s largest nation physically, Russia has huge natural resources, and I imagine most are undiscovered. They are already among the world’s largest oil exporters. Clearly they are a scientific and military powerhouse, and they have a strong sense of national identity and pride, all potentially important factors. How can you be pessimistic about a nation like this?
 
But the world is not without naysayers. While I gathered the growing middle classes are delighted with the bounty of capitalism – and certainly the “oligarchs” with their Bentleys, nightclubs, and supermodel girlfriends – not everyone has come out ahead. When I asked one cabbie what he thought, he wanted to go back to Brezhnev – a world where everyone knew their job and their pay and there were on uncertainties, no risks if you kept your mouth shut and your head low.
 
I am confident that smaller city and rural Russia is a different story from Moscow and St. Petersburg, another city that now has good buzz. Like China, I imagine the rural folks are not leading as celebrative a life as the urbanites. But you have to start somewhere. (See my forthcoming report on visiting small city Thailand).
 
Some things were badly organized (like visiting the Kremlin) or difficult and overpriced (like shipping books home), but again these are familiar experiences in “developing” nations.
 
The most common worry I hear is about Putin and his (widely believed to be) “puppet” Dmitry Medvedev. The ex-KGB Putin is a strongman.  He has limited his political opponents, been aggressive towards his neighbors, and strengthened the power of the central government.
 
But I have seen too many times when the right strongman paid off for a country. Mahathir’s Malaysia and Lee Kuan Yew’s Singapore and today two of the most successful, peaceful, and livable countries on earth. South Korea has emerged strong and even the Philippines is looking up. When you come out of an era of instability and confusion, sometimes the right strongman does the right things. Maybe Putin makes us Americans nervous, but I have found very few Russians who don’t think he is/was the right guy at the right time. Certainly compared to 90% of his predecessors, going back over 100 years, he is a real sweetheart.
 
And to my above comments add the rich history and culture that is Russia. Add composers Stravinsky and Prokofiev, writers Tolstoy and Dostoyevsky, film-maker Eisenstein. Add the Bolshoi Ballet, which I was lucky enough to witness. Add the now restored glorious Russian Orthodox cathedrals and churches. Add the strength of the Russian spirit, the ability to withstand 70+ years of horrific “leadership.”
 
Particularly telling to me was, of all things, a massive Russian cemetery, which contained the graves of many famous Russians. In a land in which creativity was effectively banned, and often severely punished, for over 70 years, the cemetery’s memorial statuary reflected tremendous artistic skill and diversity. Now at last, that human capital, that human spirit, is freed.
 

Unlike two weeks ago, I now believe that Russia has one of the greatest “upsides” of any nation on earth. A large population of motivated, literate people backed by enormous natural resources and a key role in the world geopolitical game are unlikely to fail, especially if they have strong, brave leadership with an eye toward the future. The world will be better and safer for all of us if this great nation continues to rise toward its full potential. 

     

6 COMMENTS

  1. Gary,

    I’ve spent quite a bit of time living in that part of the world (Kyiv mostly, but would travel to Moscow and other FSU cities frequently) and although what you are saying is true, my enthusiasm is cooled by the night and day difference between a few major cities and the rest of the country. Moscow is less than 10% of the population, yet that city has 90% of Russia’s money. From what I saw (working with a small American start-up) corruption is still so bad that very few small businesses are able to overcome the enormous number of “fees” that go along with just doing business. I watched companies go in after Ukraine’s Orange revolution in 2004 full of enthusiasm and then lose their shirts within a year do to corruption and beaurocrats wanting their part.

    That being said, I do think nimple small companies with local partners can make a go. I love watching legitimate enterprises succeed there, and see huge opportunities for smart & savvy entrerpeneurs. Unfortunately, the average guy has it much harder because he doesn’t know how to deal with the tax police – and until the enviroment is more friendly to people just trying to make an honest living, I will be very wary of investing in Russia, Ukraine, etc.

    Best,

    Antonio

  2. Thanks for your comments, Antonio.
    I have heard some of the same thoughts from a friend who lives in the Ukraine. I saw enough entrepreneurial activity, and American franchises, in Moscow to believe that these issues can be overcome. But I also know that some countries make it about impossible to start a new business due to paperwork, permits, taxes, etc. On this trip I also stopped in Singapore and (briefly) Dubai, where I think they make it much easier. My own focus tends to be on retail and restaurant businesses, which may be a little easier to enter. But their hotel industry seems behind the eight ball.
    I also believe your comment about the gap between the city and the countryside — this is true of many nations. I would love to get back to Russia and see some of that countryside myself. I would hope some regions are doing better than others.
    Gary

  3. Hi Gary, Two points: in reference to your trip to Russia and the three ‘iterations’ I see many similarities to that of Germany. One of my favorite authors is Stephan Heym who was born in the German Empire and lived in the Weimar Republic, Nazi Germany, the U.S., East Germany, the Federal German Republic and finally Israel. In his manuscripts (most in German) he would discuss the similarities of cultural behaviors under each form of government, both the positive and negative. I see the same thing with Russia today, whether it be in business or personal interaction.

  4. What about pre-1880? Russia has a very long history, and I would be interested in your observations about how it influences the national culture.

  5. Thanks, Bill. There is no question that pre-Soviet history has a huge impact on the Russia of today, a lot more than it did in the Soviet era. The last Tsar, Nicholas II, was executed by the Bolsheviks, but was recently made a saint — a bit controversial, I think. Like most any stream of monarchs, the Tsars ranged from visionary to idiotic, heroic to evil.

    The church has also played a dramatically increased role in modern Russia, to the surprise of some. Banned by the Soviets, it is back in full force. Many formerly atheistic Russians now believe in God, and some even believe that the disarray and confusion of the transition from Marxism to Capitalism has driven many people in this direction. Certainly the country has many beautiful churches, some restored and one big one in the heart of Moscow built over again from the ground up at a cost of hundreds of millions od dollars (Stalin destoyed it in the 1930s and was going to build one of the world’s tallest buildings in its place — topped by a huge Lenin statue — but this was never built.)

    I think it will take years for Russia to really digest its own past and come to terms with it — and for me to learn everything I want to learn about it.

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