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Russians rejecting money for barter2009-05-01

Increasing numbers of Russians are rejecting money in favour of barter and it's not just individuals. Companies large and small are bartering as a way of staying in business.


LEIGH SALES, PRESENTER: According to the old saying, money makes the world go round. But in Russia, more and more people are relying on bartering. And it's not just individuals who are exchanging goods and services; companies large and small are bartering as a way of staying in business. But some analysts warn that bartering is trading away a quicker economic recovery for Russia. Moscow correspondent Scott Bevan reports.

SCOTT BEVAN, REPORTER: This may be how business is usually done, but with money drying up, many Russians are looking to exchange goods and services directly.

KHADIS ALIEV, RUSBARTER (voiceover translation): With the economic crisis, barter deals, barter companies, the whole barter market is growing quite fast.

SCOTT BEVAN: On bartering websites, thousands of exchange offers are popping up, suggesting how tough times are for some. A cottage for a car, rubber boots for a box of chocolates, even retail discount cards for baby food.

KHADIS ALIEV (voiceover translation): Barter is saving the Russian economy.

SCOTT BEVAN: Companies are also bartering, with everything from building products to apartments being used as currency and as a means of survival.

ANDREI YAKOVLEV, HIGHER SCHOOL OF ECONOMICS: Non-payments from our customers, from consumers is the main reason for development of barter.

SCOTT BEVAN: Dmitry Morenkov from a firm called Russian Grain says his company is doing fine, but under extraordinary circumstances they've had to accept payment in forms other than money from customers. On the whole, he's sceptical of bartering.

DMITRY MORENKOV, RUSSIAN GRAIN: For example, for a grain trading company to be paid by cars, for example, or whatever, by oranges, it will be quite difficult because to sell it to someone else and to be paid by let's say a third type of commodity.

SCOTT BEVAN: German Sterligov thinks linking up companies and exchanging commodities is the way of the future.

GERMAN STERLIGOV, ANTI-CRISIS SETTLEMENT AND ACCOUNTING CENTRE: The money is like this good or like this good or like this good.

SCOTT BEVAN: After becoming a millionaire in the new Russia in the 1990s, German Sterligov retired to a simpler life in the country.

Now he's come out of the wilderness and set up what's called the Anti-Crisis Settlement and Accounting Centre. His aim is to create a global chain through a database, linking five or so companies at a time where goods, services, even debts, and for those who have it, money, can be exchanged.

Sterligov believes the credit crunch may be a nightmare for banks, but it's an opportunity for his system and it helps companies with products but no cash flow to stay in business.

GERMAN STERLIGOV (voiceover translation): It's a simple case of exchanging commodities for other commodities. It's the way it's been done through the history of mankind, before the banking system came to the fore.

SCOTT BEVAN: Bartering is estimated to account for up to 5 per cent of total sales in Russia, still a far cry from its prominence during the turbulent 1990s when bartering was believed to be involved in more than half of all transaction.

Analyst Andrei Yakovlev says bartering could help struggling companies ride out the crisis, but in the longer term it could prove to be a hindrance to Russia's economic growth, particularly in its recovery from the downturn.

ANDREI YAKOVLEV: For state budget it's practically impossible to collect taxes in kind, in barter. It will reduce opportunities for government and for state to resolve some problems due to the crisis.

SCOTT BEVAN: Russian Grain's Dmitry Morenkov says while it's difficult for the private sector to use bartering, it could be a tool for governments to exchange goods on a global scale.

DMITRY MORENKOV: Maybe with the time, in case the world economic crisis develops more, so just we will have to think about this possibilities and realities.

SCOTT BEVAN: But the trading director hopes it doesn't come to that and that the crisis ends quickly and money once more flows freely. Scott Bevan, Lateline.

Russians rejecting money for barter
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