Vodka lords flee war of Dead City

Russia's booze rackets are so violent that gangsters daren't live in their own palacesin bold in it please

One glance at their grandiose turrets and you know that they are the kind of properties that would exhaust the vocabulary of the most silky-tongued estate agents. Parking space for five Mercedes. Twenty rooms. All yours, my friend, for a steal. How about $100,000? Even $80,000 might do.

And yet no one wants to live here, not even their owners. So frightened are those who have paid for the new houses rising up around the city of Saransk in Russia that many have registered their properties in the names of grandmothers and cousins living in nearby farming villages. And so few are the residents of these mini-palaces that the area has acquired a local nickname: Dead City.

Clumps of large red-brick private houses, almost all of them breathtakingly ugly, have been sprouting like mushrooms after a summer rain on the edges of the biggest Russian cities - Moscow, St Petersburg, Volgograd, anywhere where there are pockets of newly-rich Russians who prefer to lock away their money in bricks and mortar rather than in dodgy or inquisitive banks, or under the mattress.

But Saransk, capital of Mordovia, one of the poorest republics in the Russian Federation, is one place where you would not expect to find them. Nothing else about this gloomy city of 300,000 indicates that free-market reforms have displaced Communism. A statue of Lenin still stands guard in the central square, the epicentre of a monochrome city where the Technicolor world of advertising has yet to dawn.

Sports bars, foreign restaurants, night-clubs, discos, superstores, bank cash dispensers, skyscrapers, drive-in fast-food joints - all are as foreign a concept to the average Mordovian as a snow-free winter. For the majority who live on paltry state subsidies among monolithic Soviet-era municipal buildings and austere state-controlled stores, consumerism has yet to arrive.

With one exception. Some 70 per cent of the owners of Dead City are businessmen who are believed to have made their money illegally, according to Alexander Pudin, spokesman for the head of the republic. Of these, a sizeable proportion owe their wealth to the cut-throat world of vodka running.

Not least among the reasons that they will not live in their homes, or admit to owning them, is their fear of finding an enemy living next door. "There have been constant battles over turf, shootings, explosions," said Mr Pudin, "Some people are afraid because there is no guarantee that if they live there their house won't be blown up."

There is also a hefty property tax, a factor the booze runners - used to getting their way with bribes and threats - appear to have ignored when they built their homes. Until recently, they were part of a phenomenon that was sweeping much of Russia. They were responsible for a flood of imported and illegal vodka that was undercutting the local brands, severely denting government income from tax. Every night lorries would rattle in bearing moonshine from the north Caucasus that could be bought for as little as $1 a litre. Earlier this year, the head of the administration, Nikolai Merkushkin, decided that enough was enough. He began a crackdown, imposing a minimum price of just under $2 a bottle, demanding quality certificates and launching an investigation into corrupt officials who, palms well greased, had turned a blind eye to the practice. In the month after the clampdown, revenues from vodka taxes rose eighteenfold.

In doing so, Mordovia blazed a trail that the Russian federal government now seeks to tread. Being the world's biggest drinkers, Russians spend more than $10bn (pounds 6bn) a year on vodka, yielding big returns for the government, especially in Soviet times, when the industry was under tight government control. Since then imports from the Netherlands, Germany, the United States, Ukraine and elsewhere, plus a flood of outright fakes, have exacted a heavy toll.

Last year, Russian vodka manufacturers saw their production plunge by a third. "Our Russian folk are getting poisoned with bad vodka from abroad or from the local moonshine industry," complained Vladimir Yarmosh, from Rosalko, the Russian vodka producers' association. According to some estimates, 40 per cent of the vodka sold in Russia these days is illegally produced.

Frustrated by the loss of an estimated pounds 220m a month in taxes, the federal government has decided to act. Last week Boris Yeltsin promised to restore a state monopoly of the alcohol industry. He is planning a crackdown on the production, importation, labelling and distribution of alcohol, and will strengthen the central government's powers over regional authorities. The move follows protective legislation introduced last year, including import quotas for foreign vodka and making all importers pay all their duties up front.

It is unclear, though, how the monopoly will be imposed: the government says that there are no plans to renationalise Russia's private distilleries and liquor shops. And Mr Yeltsin's position is not helped by the fact that until recently the Kremlin had close links with the heads of a tax- free vodka import racket through the National Sports Foundation, a murky slush fund involving some of the president's former associates.

The Kremlin's dream, of course, is that the residents of Dead City will soon be unable to afford to live in their lavish homes, even if they wanted to. But corruption and violence run deep in Russia, especially when there are fat profits at stake. And the moonshine industry is almost impossible to stamp out - as Mikhail Gorbachev found when he tried to wean his countrymen off their beloved vodka bottle.

Start your day with The Independent, sign up for daily news emails
News
i100 In this video, the late actor Leonard Nimoy explains how he decided to use the gesture for his character
Arts and Entertainment
Secrets of JK Rowling's Harry Potter workings have been revealed in a new bibliography
arts + ents
News
Down-to-earth: Winstone isn't one for considering his 'legacy'
people
News
news
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Sauce Recruitment: Retail Planning Manager - Home Entertainment UK

salary equal to £40K pro-rata: Sauce Recruitment: Are you available to start a...

Ashdown Group: Front-End Developer - London - up to £40,000

£35000 - £40000 per annum: Ashdown Group: Creative Front-End Developer - Claph...

Recruitment Genius: Product Quality Assurance Technologist - Hardline & Electric

£18000 - £24000 per annum: Recruitment Genius: The role in this successful eco...

Ashdown Group: QA Tester - London - £30,000

£28000 - £30000 per annum: Ashdown Group: QA Tester - London - £30,000 QA Tes...

Day In a Page

HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?
How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

Time to play God

Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

MacGyver returns, but with a difference

Handyman hero of classic 1980s TV series to be recast as a woman
Tunnel renaissance: Why cities are hiding roads down in the ground

Tunnel renaissance

Why cities are hiding roads underground
'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

Boys to men

The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
Crufts 2015: Should foreign dogs be allowed to compete?

Crufts 2015

Should foreign dogs be allowed to compete?
10 best projectors

How to make your home cinema more cinematic: 10 best projectors

Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

Manchester City vs Barcelona player ratings

Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

Monaco: the making of Wenger

Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

Chris Gayle: The West Indies' enigma

Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
In Ukraine a dark world of hybrid warfare and murky loyalties prevails

In Ukraine a dark world of hybrid warfare

This war in the shadows has been going on since the fall of Mr Yanukovych
'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

Homage or plagiarism?

'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
Broadchurch ends as damp squib not even David Tennant can revive

A damp squib not even David Tennant can revive

Broadchurch, Series 2 finale, review
A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

Inside the mansion of Germany's 'Bishop of Bling'

A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower