Police to clamp down on illegal currency traders

The last time someone in the Soviet Union was shot for illegal hard-currency trading was in 1986 or 1987, but no one can remember exactly when. His name was Sokolov, people recall, owner of what was then Yeliseevsky supermarket, on Arbatskaya street in downtown Moscow.

As Russia's liberal economic dream crashes down around ordinary Muscovites, Mr Sokolov's legacy is being remembered. The hard-currency black market, unknown for the last half-decade as the country moved towards full currency convertibility, again shows signs of returning, as the Russian government has begun to clamp down on "economic crimes" to control the free fall of the rouble.

Yesterday, the rouble was being offered in several exchange booths around Moscow for 10 to the dollar, having plunged through the officially-declared floor of 9.5 to the dollar declared by the government on August 17th. By noon, most of these kiosks had taped signs to their bullet-proof windows saying no hard currency.

While authorities have allowed traders to offer dollars for 15 per cent more than the official rate, police are clamping down on unlicensed traders, who stand next to exchange booths in Moscow, offering dollars or roubles well outside the official rate.

Yesterday, one woman in Kievski train station, standing next to an exchange booth, was offering to sell roubles for 11 to the dollar. "I am on my way to Ukraine, and they say that the rouble is falling against the hryvnia (Ukraine's currency), so I am trying to buy dollars to protect myself," she said. But after buying $50 from a blue-jacketed man, who bargained her up to 11.50 to the dollar, two sweater-clad men grabbed the pair, showed badges and whisked them off to a police car.

Mr Vladimir Vershkov, the Moscow municipal police department's spokesman, confirmed that police have been told to crack down on illegal hard-currency trading. "We are getting tougher on economic crimes."

In many of Russia's regions, the restrictions on hard-currency trading are even more draconian. In some places, dollar sales effectively have been forbidden, as the regional governments try to hang on to as much cash as they can.

In the Kamchatka peninsula, press reports said, the "black market" exchange rate stood at Rbs12 to the dollar yesterday, while the "theoretical" rate was nine.

"In many regions of the country, `black exchanges' are now active," said Mr Gennady Selezniev, the speaker of Russia's state Duma, the lower house of parliament.

Mr Selezniev has led the charge against "illegal speculative trading in hard currency", which many ordinary Russians blame for the collapse of the rouble and their savings.

Mr Selezniev announced yesterday he had evidence that Russia's largest banks were planning a last-ditch surge of capital flight to escape the imposition of currency controls. "From the safes and stores of the largest commercial banks a massive withdrawal of hard currency is happening, and it is being prepared for shipment abroad," his press secretary, Mr Mikhail Beliat, said.