Jul 17, 2009
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Questions surround "Tsar" Putin's market closure

Jul 17, 2009

By Gleb Bryanski

MOSCOW (Reuters) - Eastern Europe's biggest market was a teeming, highly profitable emporium of contraband clothing which thrived on Moscow's outskirts for nearly two decades -- until Prime Minister Vladimir Putin suddenly shut it down.

Cherkizovsky market - Photo: REUTERS/Alexander Natruskin

The closure of Cherkizovsky market last month threw tens of thousands of people out of work at a time of severe recession, caused chaos in the clothing trade and drew a strong protest from neighbouring China, where many of the goods were made.

Underlining the arbitrary and unpredictable nature of law enforcement in Russia, Putin made his drastic move for reasons which are still not fully clear.

Located only eight km (five miles) from the Kremlin, the vast market sprawled across 300 hectares and despite the huge amount of contraband it sold to shoppers and wholesalers, prospered for the whole of Putin's 2000-2008 presidency.

So why close it now ?

Ostensibly Putin acted last month to protect the national textile industry from collapse after hearing a report on the effects of competition from cheap Chinese contraband. Many of the traders from the market are from abroad.

Other theories heard in Moscow involve the all-powerful premier losing his temper after hearing of a lavish party thrown by the oligarch who owns the market and a power struggle between corrupt police factions.

Whatever the explanation, the police clampdown on the market is evidence that Russia's legal machine rarely operates without orders from the top leadership despite President Dmitry Medvedev's pledge to introduce the rule of law.

"When the tsar (Putin) told them that a disgrace is taking place, they started to enforce order, but this disgrace has been going on for 20 years," said Gennady Gudkov, deputy head of the Russian parliament's security committee.

Now, groups of jobless Chinese and Vietnamese traders squat on their haunches guarded by Russian police in a park in eastern Moscow outside the once-bustling market.

Police guard the vast territory, a labyrinth of metal containers and stands, which thronged with traders from all over the world until its final day of business on June 29.

The market's problems began when Putin called on his cabinet at a June 1 meeting to stop the thriving trade in smuggled counterfeit goods and demanded prison terms.

"The fight is on but results are few. The results in such cases are prison terms. Where are the prison terms? There is only talk," a visibly irritated Putin told his ministers.

"I remember, a few years ago I practically dismissed all the top people in the customs service. And then what? The channels (for smuggling) are working as they did before. There are still goods worth over $2 billion at a certain market."

The Russian law enforcement machine then swung into motion. Inspectors descended on the market en masse and "discovered" a long list of violations of sanitary regulations.

Police then evicted traders and seized their goods.

"This disgrace should be ended once and for all. This hell-hole has to be closed," said Russia's chief criminal investigator Alexander Bastrykin.

Jobless traders question why they, and not corrupt bureaucrats, were chosen to suffer.

"The goods from Cherkizovsky are in every Moscow shopping centre, in every high street boutique. The whole country plays the same game, why are they closing us down?" said Yelena Yevseyenko, 37, a trader from Ukraine.


Other forces may have been at work.

One week before Putin's angry speech, the market's owner, businessman Telman Ismailov, threw a lavish party in Turkey for the opening of his $1.4 billion Mardan Palace hotel, where guests included actresses Sharon Stone and Monica Belucci.

Despite his friendship with Moscow's influential mayor Yuri Luzhkov, who cut the ribbon at the hotel's opening, Ismailov has not returned to Moscow after Putin's speech and media have reported that he has sought Turkish citizenship.

Luzhkov challenged Putin at the end of the 1990s in parliamentary elections and although the two men have worked together since, their relationship is uneasy. Some analysts believe Putin's move against Ismailov was intended to send his protector Luzhkov a message that his days were numbered too.

Political analyst Stanislav Belkovsky had a different theory, saying the market's closure was a result of a struggle between rival police clans over the control of the lucrative trade in counterfeit goods where Putin was simply an instrument.


Cherkizovsky, which was founded in 1993 and has become a nationwide centre for trade in counterfeit goods, survived several previous attempts to close it, turning into a symbol of lawlessness and corruption in post-communist Russia.

A report by the Industry Ministry estimates the share of fake clothing at 46.8 percent of the market's turnover in 2008 and Deputy Trade Minister Sergei Naumov said every trading stand in Cherkizovsky meant a closed Russian clothing workshop.

But the market also provided work for hundreds of thousands of people across Russia and abroad who traded its goods.

About one hundred Chinese and Vietnamese traders attempted to block traffic on a Moscow street last week but their protest was quickly dispersed by police.

"The situation is critical. People have no food and sleep under trees because they can't afford to pay rent," said Muhammad Amin Madzhumder, head of the Federal Migrants' Association, who estimated the number of jobless traders at about 100,000.

Police say many traders are still hiding in underground dormitories set up in the corridors of Soviet leader Josef Stalin's wartime bunker, located at the heart of the market.

"We don't even go there. There is a whole Klondike underground," said an officer from the much-feared riot police, OMON, who spoke on condition of anonymity, in reference to Alaska river where the 19th century's Gold Rush took place.

(Editing by Michael Stott and Philippa Fletcher)

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