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Russians rub out references to all but ruble

A strongly supported law would ban officials and businesses from referring to any other currencies.

By ASSOCIATED PRESS
Published May 25, 2006

MOSCOW - Russian lawmakers on Wednesday tentatively approved legislation that would ban stores, restaurants and other businesses from listing prices in dollars or euros, and bar Cabinet ministers from peppering public statements with references to currencies other than the ruble.

The measures, which passed easily in the 450-seat State Duma, the Parliament's lower house, are aimed at bolstering the authority of the ruble, which has staged a remarkable comeback after its chronic weakness during the economic turmoil of the post-Soviet era.

The bill outlawing prices other than in rubles passed on the first of three required readings in the Duma by 375 to 2, with 1 abstention.

Lawmakers voted 384-0 with one abstention in favor of the measure obliging government ministers and their subordinates to state the value of various goods and services only in rubles and avoid converting them to dollars and euros, as is common practice in Russia.

"All government officials must pronounce only the word: ruble!" said ultranationalist lawmaker Vladimir Zhirinovsky.

After the 1991 collapse of the Soviet Union, hyperinflation hit the ruble, and the dollar and German mark became the currencies of choice for most anything worth buying. By the late 1990s, Russia had banned transactions in those currencies, but hard-to-enforce rules meant businesses still routinely listed their prices in dollars or marks - or later, in euros - even if payment still has to be made in rubles.

Adding to the confusion, currently prices can be shown in the form of so-called "u.e." - an abbreviation formed from the Russian for "conditional units."

Customers still pay in rubles, but must first understand what the store, restaurant or real estate agent has pegged its "u.e." to: the dollar, the euro or a rate of its own making.

The move comes against a backdrop of oil-driven economic growth that has seen the ruble strengthen by nearly 7 percent against the dollar this year.

At today's exchange rates, it takes 27 rubles to buy a dollar. In 1998, before Russia's financial collapse, the rate was just more than 6 rubles to a dollar.

By 2002, the exchange rate was more than 32 rubles to the dollar.

The government plans to make the ruble fully convertible by removing the remaining restrictions on currency movement as of July 1.

Some Russians, however, find the proposed measure uninspiring, predicting it would make official presentations virtually unintelligible as speakers wrestle with zero-laden statistics.

For instance, an official mentioning Russia's swelling oil fund, which currently stands at $66.7-billion (52-billion euros), should give the unwieldy figure of 1.8-trillion rubles.

Critics also say that small businesses rather than top officials will bear the brunt of the new restrictions.

"I am sure that lawmakers, (Prime Minister Mikhail) Fradkov and other state officials will not face sanctions, but the average merchant will have his skin ripped off," said Yuri Ivanov, a Communist lawmaker in the Duma.

Another Communist Duma member, Oleg Smolin, criticized what he described as an attempt to legislate an improvement in the ruble's reputation rather than through effective economic measures.

"We agree that the problem of 'dollarization' of the country exists, but the question is what is the cause and what is the result," said Smolin.

"Instead of solving real problems we are asked to imitate our (Parliament) activity."

[Last modified May 25, 2006, 05:42:35]