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Moscow - Rich in Russia, October 2003


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Synopsis of "Rich in Russia"

HOW TO MAKE A BILLION DOLLARS
The Oligarchs

INTERVIEW WITH MIKHAIL KHODORKOVSKY
Money, Power and Politics

REPORTER'S NOTEBOOK
Examining the Young and the Restless

FACTS & STATS
Government, Population, Economy

LINKS & RESOURCES
Life in Russia Today and the Transition to Capitalism

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Russia's new rich are living it up ; But oligarchs' children wonder: How long will it last?

By Sabrina Tavernise

It is Saturday night and tan young people in designer clothing recline on richly upholstered couches in a chic new nightclub called Chocolate.

Bentleys and Ferraris are parked outside. A French DJ named Red is playing lounge music.

These are the children of Russia's new rich, the first generation to have come of age after communism. Their parents came into their fortunes during a few short years of Russia's property grab in the 1990s. They hungered for luxury after years of Soviet deprivation, flocking to resorts in southern France and filling Moscow's streets with Mercedes-Benzes. There was a downside to these instant fortunes amassed during the economic chaos. The vast majority of Russians consider them only partly legitimate. Perhaps more dire, the government occasionally threatens to take it all away, as evidenced by the Kremlin's recent attack on Russia's richest man, Mikhail Khodorkovsky.

"You live with the constant feeling that everything could be taken away tomorrow," said Kseniya Sobchak, 21, a wealthy Russian and the daughter of Anatoly Sobchak, a leading democratic reformer of the late 1980s. "Fathers are rich today and in jail tomorrow."

The young people remember little or nothing of Soviet privations. Many have servants. They are educated in Swiss and British boarding schools. They ride in chauffeured cars instead of Moscow's subway system, the transport common to almost all Muscovites until the early 1990s.

"They're nobility," said one foreigner who teaches in the homes of some of Russia's wealthiest families and requested anonymity. "They are above the law. They have police working for them, guarding them. They grow up with the assumption that they are born to rule."

Sobchak, one of the Saturday night club goers, glided to the fourth floor in a glass elevator and ordered green tea and a bowl of cherries. She chatted with her friends about how, on a recent visit to Yekaterinburg, local Russians had treated her like Madonna.

She says she lives in "little oases of normal Western lifestyle," a remark that highlights the vast gap between rich and poor in Russia.

"Home, the car, the health club, entertainment," she explained on a recent evening in a Moscow sushi restaurant. "You go out on the street and it's dirty. There are people and their envy. It's a lot of negative energy."

In a country that at least paid lip service to social egalitarianism just 12 years ago, and where the Communist Party to this day regularly picks up at least one-third of the vote, these are fighting words. Indeed, such remarks have raised the ire of ordinary Russians.

As Sobchak acknowledged, "The upper class is the other side of Russians living badly."

The gap is also apparent in Moscow's prestigious Mgimo, the Harvard University of Russia, Sobchak's place of study. The university, where students are groomed to become diplomats, was always an elite institution. But entry used to depend more on Communist connections and brains; now money talks, and it has become a favored destination for Moscow's rich young people.

"There was a very significant change in the early 1990s," Andrei Melville, the vice rector of the school, said in an interview. "Our students I started to call them yuppies." The changes have segregated the student body outside the classroom, he said.

"Children from very well-to-do families and from regular milieus don't mix. As students in the class, they are the same. But when they leave, some get into their Mercedes and go to nightclubs and spend in a night what other students wouldn't have for a month."

While the most insecure of Russia's rich hide behind mansion walls as if in prison, Sobchak likes the limelight. Her good looks frequently land her on the cover of magazines. She is part of many social gatherings and luxury boutique openings. The twists of her love life are discussed in gossip magazines.

Most nouveaux riches in Russia are afraid to have their names publicized. Too many question marks hang over the origins of their wealth and the result has been a spending spree that has yet to abate. Because, given the capriciousness of Russian history, it could all be gone tomorrow.

The children of Boris Berezovsky, the media tycoon who is now a fugitive from Russian law in London, are a case in point, said Sobchak. They "used to think they owned Moscow, but now they live in London and can't come back."

"We were like kids in a candy store," said Olga Sloutsker, founder of an elite chain of fitness centers in Moscow, referring to the time when the Soviet Union began to open up to the outside world. "We wanted to use and consume everything that was there."

Sloutsker said that one of the challenges for young Russians would be to find adults to look up to in the topsy-turvy new Russia, where most celebrities have been imported from the West and capitalism is at its most raw.

"We turned away from communist ideology, but we didn't find anything new," said Sloutsker. "We lost our symbols, our heroes. Kids saw Mafia, corruption, pornography. They saw that lies and dirt were things that got you what you want."

Gradually, things are changing. Young people could be the hope of the new Russia. They have studied abroad, and many are returning. Often, they speak several languages.

One 25-year-old woman, Yekaterina Gomiashvili, who spent eight years in boarding schools in Switzerland and London, has started a clothing design studio in a two-story building across from her father's restaurant in central Moscow. She now employs 12 people in a business she says pays for itself.

"I was a pretty spoiled kid St.-Tropez and everything," she said, referring to the expensive French Riviera resort. "I partied and partied. But it stopped being fun."

Still, it is too early to know what choices they will make as a generation.

"If everyone keeps their money in Switzerland, we have a bad future ahead of us," said Irma Ignatova, a television anchorwoman whose show featured the lives of the rich and famous. "I hope the kids understand this."

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Originally published in The New York Times on July 31, 2003. Copyright 2003 The New York Times. For more New York Times articles please visit www.nytimes.com.

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"Russia's New Rich Are Living It Up, but Oligarchs' Children Wonder: How Long Will It Last?" (July 31, 2003)

"To Young, a Russian Enclave Is Too Much the Old Country" (October 8, 2003)

Interview With Sabrina Tavernise

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