[FOUNTAIN]Rubles reign after the fall of the USSR

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[FOUNTAIN]Rubles reign after the fall of the USSR

The currency of the Soviet Union was the ruble, which was derived from Russian verb “rubit,” to cut. In ancient times, silver was used as currency in the Russia, and merchants would wear silver coils on their waist and cut the necessary amount to make payments. “Ruble” first referred to the cut silver and came to refer to the Russian currency.
But as an official currency, the ruble had a short heyday. In the communist economy, the unofficial currency was the dollar, which dominated the underground market. The dollar-based, black market-driven economy would prevail when public authority was undermined, and the underground economy would shrink when law enforcement was tight. During the Cold War era, international analysts would study black-market dollar transactions. When crackdowns came, analysts assumed the secret police had the upper hand. When the black market flourished, authority was weak.
The dynamics of the ruble and dollar became more obvious and extreme as the Kremlin introduced perestroika, an economic, political, and social restructuring program, in the mid-1980s. Thanks to Mikhail Gorbachev’s policy to encourage joint ventures with foreign companies, Pizza Hut opened in Moscow. The American pizza chain installed separate windows for dollar and ruble payments. The dollar price was over ten times the ruble price, and naturally, Russians would line up at the ruble-only window. So those who could afford to pay the dollar price did not have to wait in line at all. The Soviet press and intellectuals felt insulted by Pizza Hut’s policy, and criticized the government for allowing the price discrimination. But the power of the dollar and other foreign currencies spread to other sectors of the economy. Dollars symbolized privilege and first class products, and rubles meant second-class.
But the authority of the mighty dollar did not last long. The tendency was accelerated since President Vladimir Putin came into power in Russia. Especially as the economy became more stabile, the ruble regained a competitive edge. Recently, anti-American sentiment grew, and relations with Europe gained, so the government and the private sector increasingly used the euro as a benchmark. Those changing dynamics are a barometer of the politics and economy of Russia.

by Kim Seok-hwan

The writer is an editorial writer of the JoongAng Ilbo.
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