Russians live the caviar dream

There are homeless people, like Igor Vladimirov, 47. He begs outside the Belorussky train station, despite the city's effort to keep a cosmopolitan image by sweeping people like him from Moscow's center.

Vladimirov says he has been living on the streets since his mother died two years ago and his sister sold his mother's apartment, where he had been living. Seventy percent of housing here was acquired in 1992, when people were given the homes they were living in. But rising prices make housing scarce because construction isn't keeping up with demand.

There are no official numbers on how many homeless there are. But Putin last year said too many Russians still live in poverty, about 17% of the population, down from 30% in 1999. They live on $88 a month or less, compared with the average monthly wage of $540.

For them or the thrifty, there's another Moscow away from the hotels and designer stores. There, beer at a bar is $2 a glass, vodka can be bought in a store for $8, and a three-course "businessman's lunch" is $7.

But more typical of the rising middle class is Oxana Yakovleva, 28, who works in a Moscow bank. She and her husband, Vitaly, and two children view themselves as an average, young Muscovite family.

"In Moscow you can afford things," she says. "Prices and costs are high, but the salaries here are quite high. Most of my friends also can afford many things."

They live in a studio apartment, with a small bath and kitchen, that they bought three years ago for $65,000 in a 20-year-old building, and pay $1,000 a month in mortgage payments. She drives a Subaru Forester, for which they got a no-interest loan.

They have vacationed on Turkish beaches and in Germany the last few years. They won't this year because Vitaly, 28, also a banker, is studying business in Italy and family finances are tighter. Any foreign travel will be to Italy.

Yakovleva says she is optimistic their lives will get better — if the economy as Putin has managed it continues to improve. If it does, she says, they hope for a bigger apartment, a dacha (country house) and possibly education abroad for their children. "And I'll probably be visiting all those designer shops," she says.

Economic pressures building

Just as Putin has given many Russians a sense of economic stability and optimism, Gavrilenkov of Troika Dialog says his continued hold on power presents foreign investors with a sense of economic predictability that they seek.

He questions, however, whether Russia's economy can continue at this clip, even with oil staying higher than $90 a barrel, and filling state coffers to invest in housing, infrastructure and the military.

Russians' demand for consumer goods is outstripping the nation's ability to produce them, he says.

"The growth is too rapid," he says. "So you have to go abroad for imported goods. If the (trade) surplus shrinks … the economy will stumble and contract."

At the same time, he says, the Russian government's bureaucracy is growing by 10% a year. Inflation hovers at about 10%. In response to pressure on consumers, Putin ordered a pre-election price freeze on food staples and gasoline and tariffs on grain exports.

Gavrilenkov says the economy may not stumble in the next year or two, but it is likely to in the next five to seven years.

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