Social upheaval in Aisle 6: What does Ikea have to do with the changing face of Russia? More than you might think.

On a grey November afternoon, Hyundais, Peugeots and Mitsubishis curl off a rain-slicked freeway and flood into the parking lot of one of suburban Moscow's newest shopping malls. To the east, a storey-tall sign announces Ashan, a French-owned supermarket. In the middle is "Mega," a Russian department store. But the biggest draw is to the west, where a Swedish flag sways above the blue-and-yellow box store, IKEA.

In western eyes, it is all very familiar and not terribly interesting. It's just a shopping mall. Granted, the grocery superstore is impressively large, with 76 check-outs and supervisors who scoot around on roller blades. And the smoking section in IKEA's cafeteria is little jarring (Moscow's chain-smoking citizenry also finds it a little novel as it means there is a non-smoking section). But still, it is a picture of middle-class life at its most routine, the same bourgeois-bland scene found in any suburb from Stockholm to Ottawa.

In a word, it is boring. And that is precisely what's so exciting.

For the first time in more than a century, Russia's middle class is growing. The evidence is everywhere, from the cars people drive, to the mortgages on their new homes, to the suburban shopping malls built as fast as the concrete can be poured. This revolution doesn't have the drama of a collapsing Berlin Wall or Boris Yeltsin atop a tank. But if it is sustained over time, the bourgeois-boom could change the face of Russian society and politics just as surely as the fall of the Soviet Union.

To understand why shopping for Scandinavian sofas could change Russia's future, one must look at Russia's past.

When the Bolsheviks came to power more than eight decades ago, they were determined to destroy not only the diamond-cufflinked capitalists of socialist propaganda, but also the shopkeepers and professionals of the middle class whose habits of economic self-sufficiency were poisonous to communism. They succeeded.

Soviet society came to consist of two classes. Senior Communist Party members -- and those connected to them -- had the political pull to get good apartments, dachas, cars and vacations. Everyone else had to stand in line.

Under Communism, the idea that a person could improve his or her lot in life by working hard, saving money and planning ahead -- the universal creed of the middle class -- was foolish. The only hope was that the state would provide and, aside from making political connections, there was nothing a person could do to increase the chances that it would do so: One's economic fate was not one's own.

As the decades passed, Russians learned to be passive and expect little -- the very antithesis of the middle-class spirit.

The collapse of the U.S.S.R. and the creation of liberal democracy under Boris Yeltsin was supposed to mark the end of all that and on the surface it certainly looked like things were changing. Moscow and St. Petersburg boomed. Millionaires and billionaires sprang up seemingly overnight and cities were transformed by the glitz of advertising, casinos, restaurants, chic fashions and all the wonderful things that big money could buy.

But something was missing. Russia had a new class of ostentatious nouveau riche and it had poverty in abundance -- incomes for most people declined or stagnated -- but it had almost nothing in between. There was no middle class.

The reality was obvious on the roads. Most of the traffic was made up of shuddering old Russian cars with belching tailpipes, flimsy doors and wispy windshield wipers that could only smear the winter grime. The roads in Moscow and St. Petersburg also saw the bomb-proof Mercedes of businessmen in Italian suits and the luxury SUVs driven by young gangsters with suspicious bulges under their leather coats. But between these extremes there was little else to be seen. Reliable and affordable cars driven by the middle class everywhere in the West were as rare as an honest cop in Russia.

It's now clear the Yeltsin boom had little to do with real economic growth. It was a sham built on the corrupt privatization of state assets and countless schemes and frauds perpetrated by the people in the Mercedes and SUVs. In 1998, Russia's ruble collapsed and the boom went with it.

The first IKEA in Russia opened in a Moscow suburb on March 22, 2000. It was four days before Vladimir Putin's inauguration as president and Russia was stuck in the economic doldrums. The new store cost the company $100 million U.S. and many people thought IKEA's founder, Ingvar Kamprad, was mad.

Early results were not promising. IKEA struggled, in part because Muscovites didn't know what to make of it. Even the shuttle IKEA ran from the last subway station to the store was confusing. Do we pay the driver? No, it's free. So we have to buy something at the store? Not if you don't want to. Russians knew all about cutthroat businessmen, but this was a mystifying new form of capitalism.
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As it turned out, IKEA's timing was close to perfect. In 2002, rising oil prices started pumping gushers of cash into the Russian economy. The ruble strengthened and stabilized. Gross domestic product surged.

The changing fortunes of the Russian bourgeoisie are even more obvious in Moscow's notoriously jammed streets and freeways. The automotive extremes of bedraggled Ladas and bomb-proof Mercedes are still there, but increasingly there are Hyundais, Fords, Mazdas, Toyotas and other cars no more exotic than those found in the parking lot of any Canadian Tire.

There are moments when Moscow traffic looks not unlike that of any western city (if one ignores the very Russian sight of government officials racing by in sedans with tinted windows and flashing blue lights).

For foreign car-makers, this transformation makes Russia one of the most exciting markets in the world. In 2002, Hyundai sold fewer than 100 cars in Russia; this year's sales are expected to hit 100,000. Toyota is building an assembly plant in St. Petersburg. Ford is already here and has plans to double output: There is now a six-month waiting list for the Ford Focus.

For the past three years in Moscow, office towers, luxury condominiums, exclusive shops and gaudy casinos have sprouted like spring flowers. Just down the road from the Lubyanka, the old KGB headquarters, is an Armani boutique. Next door are Bentley and Maserati dealerships and a private supper club tailored to the tastes of the city's 88,000 millionaires (in American dollar terms) and 33 billionaires. A little farther on is a statue of Karl Marx looking quite sullen.

For the rich, happy days are here again. But this isn't the return of the Yeltsin boom.

A World Bank study released in October found that in the early years of the decade, poverty declined significantly. It continues to drop. And the poor actually benefited more from the surge in growth than the rich.

Russia remains a land of extreme divides -- between rich and poor, urban and rural, Moscow and the rest of the country -- but the recent good fortune is at least being spread a little more broadly than in the past. And most promisingly for Russia's future, the boom is helping to create a middle between the extremes.

Using a definition of middle-class income as $300 to $1,500 a month U.S., the Russian government says only 12 to 15 per cent of the population qualified in 2000. By 2004, 35 per cent of the population was middle class.

IKEA caught the leading edge of this wave and now foreign and domestic retailers are rushing to catch up. In 1999, Moscow had just two million square feet of shopping mall space; by early 2005, it had 21 million square feet. Free shuttles and other consumer services ceased to be novelties.

Lada responded by forming a joint venture with General Motors and launching redesigned models. Gone is the Brezhnev styling -- the newest Ladas resemble Peugeots -- but a little of the Soviet performance remains. Lada mainly competes by being the cheapest.

Akir, 53, has one of the new Ladas. A burly construction foreman with a Stalin-esque moustache and a poor-boy cloth cap, Akir is browsing through IKEA's selection of sleekly Scandinavian lamps. "I definitely belong to the middle class," he says with a smile. "The economy is improving the last two years. I can see it. My wages have increased. I'm quite satisfied with things."

To buy his car, Akir did something he had never done before: He got a loan. Consumer credit only became widely available in Russia two or three years ago but awareness is rising rapidly. Today, most Russians at least know about that other icon of western middle-class life, the home mortgage.

Whether all this ferment will ultimately produce a large, stable Russian middle class is a question that will not be answered for years. At a minimum, that will take continued economic stability and growth, but many observers -- including Vladimir Putin -- have worried Russia's soaring oil revenue has not yet spurred other forms of economic growth. When oil prices fall, so could Russia's boom.

Nor should the extent of rising living standards in Russia be exaggerated. An April 2005 survey by the Public Opinion Foundation, a Russian polling company known as FOM, found only 19 per cent of Russians said that they had ever driven a car.

And there's another, more fundamental, question about middle-income Russians: Do they think like middle-class people?

"There is no middle class here," says Yuri Levada, a sociologist who rose to prominence during Mikhail Gorbachev's perestroika era. "Maybe in 15 or 20 years. But not now."
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Mr. Levada's grim view is based on a definition of middle class that considers certain attitudes and behaviours to be typically middle class. Based on those attitudes and behaviours, he says, Russian society still looks a lot like it did under communism.

Stability and confidence are central to the western middle-class mind.

It takes for granted the economy won't crumble tomorrow, that incomes won't drop and savings won't be wiped out.

On that foundation, the middle class embraces the idea of investing today for future reward. Education is valued. Money is saved and invested. Work hard, sacrifice and play by the rules, the middle-class person believes, and you will get ahead.

Unfortunately, the lessons taught by communist rule and what Russians call "the Yeltsin chaos" are deeply ingrained in the Russian psyche.

Russians tend to be pessimists. They don't believe they can improve their lot in life through hard work and savings. As for playing by the rules, only suckers do that: Straight arrows don't fly in a society where corruption, abusive power and inept bureaucracy are entrenched. The people who get ahead are those with connections and a talent for working the angles. Everybody else has to sit back and accept what fate hands them.

This bleak view of the world saturates public opinion. A July survey by FOM found that despite Russia's unprecedented streak of stability and rising incomes, 52 per cent said the economy was bad and 38 per cent said it was "satisfactory." Just three per cent thought it was good.

Believing things are bad and going to get worse, Russians live for today. When FOM asked people what they would do with a windfall of about $1,400 (an enormous sum by Russian standards), four in five said they would spend it immediately. Only eight per cent said they would "put it in a bank to earn interest" and two per cent said they would invest it in a company or stocks.

Tellingly, however, more than one in five Russians told FOM they would put the windfall away "just in case." That's a form of saving, but only as a buffer against misfortune. It's also not saving as a western middle-class person knows it because it amounts to putting money under a mattress or in a sock drawer. It's dead capital.

And that's typically what Russians do with whatever they save: FOM found that while more than 40 per cent of Russians said they earn more money than they need to cover expenses, more than half of that lucky minority does not even have a bank account. (Most of those with extra cash said they immediately spend it.)

"People don't trust banks and banks don't trust people," says Mr. Levada, explaining why Russians don't put savings in banks and banks have taken so long to develop consumer credit. According to FOM, 12 per cent of Russians have had credit from a bank and eight per cent have used a credit card.

FOM also found that just one per cent of the people it surveyed had a home mortgage. More than half said they would like to buy a new house or apartment, but only 16 per cent said they would prefer to do so by taking out a mortgage.

What these numbers say about Russia's middle class is a matter of interpretation, of course. Seen from one angle, they show that the proportion of the population that thinks and lives in middle-class terms is still very small. But then this is a country that crushed its middle class, suppressed any hint of bourgeois attitudes for decades, and staggered through years of turmoil and decline. That there are signs of middle-class life in Russia, however modest, is remarkable -- and proof of real change.

Joan DeBardeleben, associate director of the Institute for European and Russian Studies at Carleton University, is guardedly optimistic. "I think there is a growing middle class that sense stability, sense prospects for improvement, feel that they can live a kind of normal life, that they can aspire to material improvement, that there's a sense of some normality." And it will keep on growing if Russia's extraordinary streak of stability and economic growth continues.

Were that to happen, the implications could be enormous. In country after country, thriving middle classes have pushed for more open societies, Ms. Debardeleben says. "When you get a middle class that feels it has enough economic resources and it feels it can use them and risk using them to achieve political ends, then that can be the next step."

Bland and boring as they are, Moscow's shopping malls may well be recognized one day as places where history was made.

Dan Gardner's column appears Wednesdays and Fridays.
E-mail: dgardner@thecitizen.canwest.com

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