Art Market: Snobs, thugs and auctioneering: Westerners are buying Russian art - and so are Russia's banks and nouveaux riches. But gangsters as well as dealers are cashing in on its new status as a marketable commodity

ART could easily seem an irrelevance in today's Russia where the populace is desperately short of food, gangsterism is endemic and a bitter struggle for power is being fought between President Yeltsin and the Congress of Peoples' Deputies. But the marketability of art, especially in hard currencies, has given it a role to play in the new order (or disorder) - a crazy, very human and occasionally touching role.

An old law banning the export of any artefact made before 1945 has meant the new art market has grown lopsided. Contemporary art is much more actively and openly traded than older art, since foreigners can buy it and take it out of the country legally. A new export law is, however, to be presented to parliament later this month; the intention is to shift the time barrier on the export of art back from 1945 to '100 years ago'.

Meanwhile, contemporary art dealers are proliferating. The Art Moscow International Fair, known as MIF, is a very successful body run by three young enthusiasts and their artist friends. They managed to find 71 commercial galleries dealing in contemporary art to attend the fair in 1991; all the commercial galleries in Russia have been founded since 1988 and sell mainly to foreigners.

For older art, auctioneers rather than dealers are emerging. This probably reflects the fact that auctioneers are commission agents; they don't have to sink capital into buying goods. There are already four or five firms in Moscow holding regular auctions of varying quality.

At the bottom of the heap is the former State antique shop in Dimitrov Street, which has been semi-privatised and started holding auctions four years ago. Every Tuesday and Saturday it auctions the kind of junk you would find in the average country antique shop in Britain. There are no catalogues; a card carrying the expert's price estimate but no description is attached to each item before it goes on view - and it still manages to get 150 to 200 items for sale twice a week. When I visited, four thugs stationed at the back door asked my interpreter if we had any goods for sale. I was later told that the thugs were there to buy (for a pittance) the best pieces that came in for sale. The antiques trade has been thoroughly infiltrated by the maf-

ias that have come to dominate private business in Russia, demanding protection money from the enterprises they do not run themselves.

At the top of the heap is Alpha Art, which has had a brief but dramatic life span. The company tried to hold its first auction in April 1991, but was banned by the Minister of Culture - after a fortnight-long exhibition. The abortive coup of August 1991 meant a new minister, and Alpha managed to hold a sale in January 1992; but only 20 per cent of the art found buyers. Things looked up with its second sale in May, which was devoted to Russian art. Ninety per cent of the works were sold, with a top price of dollars 10,000 ( pounds 7,000) for A Woman with a Rooster by Boris Grigoriev (1886-1939), a gifted forerunner of Chagall. Ten days ago it raised its auction record to dollars 16,000 ( pounds 11,500) with a romantic sunset at sea by Ivan Aivazovsky (1817-1900), who painted a series of Russian ports for Tsar Nicholas I and innumerable repeats for the rest of the court.

Mikhail Kamensky, Alpha Art's director, runs the show from an office the size of a telephone booth in the House of Artists - former home of the state-run Union of Artists. Bidding at the sales is in dollars, he explained to me, but payment can be made in any currency, converted at the day's exchange rate. At his pre- Christmas sale one buyer turned up with a brown cardboard box, which once contained a television, and was now full of roubles.

Kamensky's sales are really the first indication that an internal market is coming into existence in Russia. He is selling art of some quality, which would previously have had to be smuggled out of the country to achieve a reasonable price. And he

is getting prices which are more or less comparable to those in the West.

There has been an explosive rise in prices over the last year, he told me, as it became fashionable among Russian banks and larger companies to form art collections. Most of the big prices are paid by corporate

collectors, though collecting is also beginning to catch on with the nouveaux riches. 'We try to make our sales a social affair - the right place to be seen,' he said.

It sounds just like New York. But one must remember that the nouveaux riches of Russia do not come from the most salubrious backgrounds. 'There are only two kinds of people with money in Russia,' one long-term foreign resident told me: 'Ex-Communist officials and the men who bribed them.'

Kamensky estimates that 35 per cent of the market in older art is now above-board and 65 per cent underground. Since pre-Gorbachev days, there has been a network of traders who will buy art and take it out of the country; customs men are easily bribed, I was told. Sometimes a bottle of vodka will do the trick. But the underground market has recently become a much murkier affair; gangsters are stealing from collectors and museums at gun point and using the old-established channels to exchange their swag for Western currency.

Contemporary art has not escaped the new crime wave. Sotheby's held a sensationally successful sale of contemporary art in Moscow in 1988 - foreigners flew in and snapped up the art at many times estimate; it started a craze for buying Russian art in the West, especially in America and Continental Europe. But it also drew the attention of professional criminals to the pots of money that almost any Russian artist could command from foreigners.

According to George Nikich, one of the founders of MIF, there was a period about two years ago when criminals interested in using pictures to convert their ill-gotten roubles into dollars started to approach artists directly. 'Sometimes they even paid for their art,' he told me. However, if the artist would not give them any pictures, he was burgled. A few thought they might escape by hiding their art away from the studio, but the gangsters found a way round this, too. They provided artists whose studios were empty with canvas, brushes and paint and, showing a knife or a gun, demanded they paint several pictures a week. According to Nikich, the gangsters had been well advised on whose pictures to acquire; they only went to top-selling artists.

Most of the artists who featured in the 1988 Sotheby's sale now live abroad, but those who stayed home have shared in the proceeds of their success. Konstantin Khudiakov is chairman of the M'ARS Gallery which he founded with six other artists in September 1988; and his semi- surrealist paintings sell for around dollars 20,000 ( pounds 14,300) each. The gallery is the most successful in Moscow; registered as a charity, it exhibits paintings for sale and is building its own museum collection.

M'ARS has recently helped a series of banks and businesses to form collections. They made a collection for Optimum, a Russian bank, two collections for IBM, one for Citibank, and have been invited to form one for Chase Manhattan. With the profits they try to help young artists from the provinces.

Yevgeni Plesovskikh, a young artist from Siberia whom M'ARS executives like to compare to Tiepolo, discovered the downside of their assistance recently. Khudiakov gave him space to paint in his own studio, but enemies of the gallery set the building on fire. Plesovskikh lost nine paintings. 'We raised his prices to compensate,' said Khudiakov. They now cost dollars 2,000 each - roughly 1.2m roubles. The average monthly salary in Russia is 5,000 roubles.

I would like to thank Peter Batkin, Sotheby's emissary in Russia, for introducing me to collectors, art galleries and museum directors. His own firm is exploring the possibilities of holding auctions in Moscow to help expand the internal market.

(Photograph omitted)