That’s 1,000 olives, please

By Gillian Tett
Even in the ‘unimaginable’ scenario of a eurozone break-up, it would be less messy than in the USSR in 1991 when barter became the norm
illustration of olives and purse

A few weeks ago, I stumbled on a Soviet 10-rouble note, tucked into an old notebook. Gazing at the crumpled piece of paper, with the iconic face of Lenin, invoked a frisson – particularly given all that is now happening in the eurozone.

Back in the late 1980s, I lived in the former Soviet Union as a PhD student, where I received a (pretty generous) monthly stipend of Rbs430. As I collected notes each month, I never questioned whether that paper would always be “money”; to me it seemed self-evident that this money had value and could be spent anywhere across the USSR. The Soviet Union – and its monetary union – seemed to be permanent.



But in 1991, my assumptions were brutally turned upside down – along with those of millions of other Soviet bloc inhabitants – when the old Soviet system ceased to exist, and republics such as Tajikistan (where I had been living) declared independence. For the first few months, many republics continued to use the old Soviet rouble. After all, the task of printing and distributing new banknotes is a complex one, particularly amid political turmoil. But nobody really knew who was “in charge” of that rouble; the political union had collapsed. Unsurprisingly, prices went haywire. A hotel room might cost Rbs200 in one town in Tajikistan, but 10 – or 100 – times that in a city in Uzbekistan.The only constant was the level of student stipends.

Then the new republics started to launch their own currencies (which, confusingly, were sometimes also called the rouble), and the disorientation grew. Some of these new currencies were pegged to the old rouble or each other. But confidence in them was low, so people hunted for alternatives. Even before 1991, back during glasnost and perestroika, shops and factories had used barter to conduct some of their affairs since the Soviet financial system was so crude. But after 1991, barter became almost the norm in many regions.

One friend in Dushanbe used to import gas cookers from other Soviet republics, which he “paid” for with items such as cotton, or anything else to hand; on one bizarre occasion he even “paid” with ski goggles.

And I adapted too. By late 1991 I had become a journalist, reporting on events from around the former USSR. In some places I “paid” for things with a bewildering mixture of old and new roubles, which I carried in multiple plastic bags. But elsewhere, barter was better: I used tins of caviar to buy hotel rooms in Latvia and Estonia and I bought – or bribed – my way on to a plane in Baku with a cassette player. The only currency that was accepted everywhere was a grubby dollar bill (closely followed by the Deutsche mark or Swedish krona in the Baltics). But the exchange rate was a lottery. And since dollars could not be used for small transactions, I used Marlboro cigarettes as “currency” too; these were light and could be divided into small denominations (ie single cigarettes) more readily than dollars.

Are there any lessons here for the tumultuous eurozone? I fervently hope not. The eurozone officials are still insisting that it would be impossible for the euro to ever break apart. And even if that “unimaginable” scenario did occur, I assume – or pray – that a break-up would be less messy than in the USSR. Since the eurozone only emerged a decade ago and never pretended to be a single political structure, the separate countries have functioning central banks and finance ministries, staffed by clever technocrats who could get new banknotes printed and distributed in a hurry. Europe also has savvy companies and consumers with a global perspective; if a country such as Greece, say, suddenly left, it would probably continue to use the euro, Swiss franc or dollar as a mental reference point. I don’t expect anyone to start bartering with olives.

But, then again, it is worth remembering that the eurozone’s monetary links are exponentially more complex than they were in the USSR; that could create a different type of chaos. And today’s eurozone population seems psychologically ill-prepared for any shock. Anyone who is old enough to remember the hyperinflation of the Weimar Republic already knows just how flimsy fiat currency can be; so does anyone who saw Argentina in the 1980s (or who, like me, had their assumptions overturned in the Soviet bloc).

But there are millions of Americans and western Europeans under the age of 50 who have never lost their trust. How they will respond to a eurozone break – or seeing part of their savings wiped out – remains an open question. Hopefully we will never need to find out. But that old rouble note on my desk is a potent warning that sometimes the tectonic plates of the political economy can shift with stunning speed – even when politicians insist they cannot