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Shadow trading by international tourists in the Soviet Union
Jou&l
ofCrimim1 Justice Vol. 17, pp. 417-427 All rights reserved. Printed in U.S.A.
SHADOW
O&%7-2352/89 $3.00 + .OO Copyright 01989 Pergamon Press plc
(1989)
TRADING BY INTERNATIONAL THE SOVIET UNION
MARY
TOURISTS IN
FISH
Department of Economics and Finance Manderson Graduate School of Business College of Commerce and Business Administration The University of Alabama Tuscaloosa. Alabama 35487
LYNN EDWARDS Department of Management and Marketing Manderson Graduate School of Business College of Commerce and Business Administration The University of Alabama Tuscaloosa. Alabama 35487 ABSTRACT International travelers ofien participate in the large shadow economy operating in the Soviet Union. Many international travelers who are accessible to indigenes become suppliers in the Soviet underground markets. Tourists appear to be free to carry out these semilegal to illegal transactions without harassment or government interference unless they are dealing with drugs or illegal currencies. The explanation for this lack of deterrence may be in the symbiotic interaction between the Soviet official and alternative economies. International tourists operating in the shadow economy lessen consumer pressures in the Soviets’ overall economic system
INTRODUCTION
The criminal justice, economic, and tourism literature has a paucity of information about illegal tourist activities because they are clandestine (McPheters and Stronge, 1974; Pizam, 1978; Rothman, 1978). Yet, it is well known that international travelers engage in illegal economic activities in a variety of goods and services in many places in the world. These activities are not unique to travelers with given nationalities or to specific host countries. Illegal exchange of currencies fre-
quently occurs in countries where the official exchange rate is out of line with the market rate. Like domestic traders, international tourists buy illegal substances when they are available. The vivid pictures depicting the punishment for drug smuggling in the Malaysian and Singapore international airports point to the potential for these activities. When tourists are involved in prostitution, gambling, and similar less serious types of victimless crimes, their offenses are usually overlooked by law enforcement authorities in the host countries (Fish, 1984).
417
418
MAY FISH and LYNN
Underground or shadow economic transactions represent an important part of the dayto-day activity in the Soviet Union. Lane (1985: 65) quoted Soviet emigres as estimating the shadow economy to be ten to twelve percent of total income and three to four percent of the country’s gross national product. This analysis concerns the shadow (semilegal and illegal) transactions between intemational tourists and residents of the Soviet Union involving the exchange of western goods for rubles or Soviet goods.’ The Soviet motive is to buy western goods that are unavailable or too expensive on the legal market, and the tourist motive is to gain a potential profit.2 Government deterrence appears to be nonexistent or at best minimal. Following presentation of a profile of the tourists’ shadow transactions, three possible reasons for the Soviets’ applying only minimal deterrence to these clandestine activities are discussed.
TRANSACTIONS Observant travelers in the Soviet Union are immediately aware of the large amount of undisguised shadow transactions occuting between visitors and indigenes.3 Before visiting the Soviet Union, international travelers may be alerted to these activities by former visitors. Some suggest that the traveler bring extra items to sell. Finnish visitors often spend weekend holidays in Leningrad, which are with their shadow heavily subsidized transactions.4 In the Soviet Union international tourists are approached by indigenes on the streets and other public places or in taxis to exchange select items owned by the tourist for rubles or a Soviet product. The operations seem to follow a similar scenario. The buyers are men and women between eighteen and thirty-five years of age. The English they speak is fluent or semifluent. They shop for select items among the tourists, who are accessible while they are sightseeing or visiting places of interest. In most cases the buyers appear to be purchasing agents who watch the streets with a list of items furnished by a wholesaler or client. The western consumer goods of prime
EDWARDS
interest are items such as jeans, back packs, tie shirts, sweat shirts, cassette players and tapes, radios, tennis shoes, imported cigarettes, calculators, and cosmetics, including fingernail polish. Examples of Soviet goods offerred in payment are furs, lacquer boxes, and military uniforms and buckles. Younger tourists are more apt to be carrying the goods that are in demand. The items openly exchanged are usually not illegal or, at worst, they are semilegal, but the transactions are semilegal or illegal. The Soviets resell the goods in flea markets, under the counters, or in their homes. The professional Soviet wholesaler may have several clandesdine sales locations known to his or her agents and customers. 5 The buying agents work on commission. This is verified by the amount of rubles they are willing to pay for a single transaction involving several items, such as a cassette player, a nearly new sport jacket, and a pair of men’s Nike tennis shoes in good condition. The total price will be between the ruble equivalent of $600 to $800, an amount which indicates underlying financial support. The selling price usually is four to six times the original purchase price in U.S. dollars, depending on the item and its condition. Items that symbolize western culture, for example, a Harvard sweat shirt or a New York Yankees cap, can be sold at a premium. Bargaining skills that represent considerable practice in their underground economy are clearly demonstrated by the Soviet buyers. An example of their application is that the buyers, in most cases, will ask the seller to quote a price. Economists maintain that this establishes the seller’s top price and, thus, prevents the buyer from offering a higher price than necessary to purchase the goods (Adams, 1972; Latimer, 1981). This is often the taxi driver’s bargaining style. It is also used on the street, but there probably to attract the attention of the tourist as well. Another illustration of the sophistication of market negotiations is the prowess of taxi drivers in Moscow. When a tourist asks to be taken from one hotel to another, the driver may quote the price in Marlboro cigarettes. The naive tourist who does not smoke may
Shadow Trading by International Tourists in the Soviet Union
well say, ‘I have no cigarettes. n At that point,
the taxi driver or a nearby interpreter will explain that the tourist can walk into the hotel hard currency shop and buy the Marlboros with dollars.‘j The dollar price of the cigarettes is lower than the ruble/dollar exchange rate of the taxi ride because the ruble price of Marlboros is higher than the dollar price. The taxi driver is paid the value of Marlboros in the Soviet economy. Thus, the tourist is paying less than the actual value received by the driver.
DETERRENCE The Soviet authorities are well aware of these semilegal and illegal transactions. Since the goods are not illegal, they can be used. The illegal transactions, per se, are the offense (Katsenelinboigen, 1977 :62-63). The transactions are carried out in the middle of Red Square or on a main street in Leningrad or Moscow at midday. Entrance identification required by the hotels where intemational visitors stay is not a preventative since buyers often conduct activities in the travelers’ hotel rooms. There are several possible reasons why the Soviet government allows this shadow market to operate with little deterrence. Three are suggested here. The last explanation seems the most likely. International
Tourists
First, the Soviets encourage international tourism both to collect much-needed hard currency and to develop a favorable world political image (Mead, 1986 : 445) .’ Visitors entering the U.S.S.R. list all currencies and valuable items, such as gold jewelry, brought into the country. Suitcases are sometimes searched by customs officials. Rubles can be legally purchased with other currencies only in the Soviet Union and only at govemmentdesignated banks. All legal currency exchanges are registered by the bank.* When the visitors leave the country, customs officials could check import declarations and all receipts and exchanges. All tourists interviewed reported that this was not done when
419
they left. Certainly, spot-checking one out of every twenty international tourists would discourage illicit trade. Signs or instructions indicating that receipts will be checked clearly would stop significant trading. If this were done, all the benefits from shadow transactions would have to be consumed by the seller within the country. In addition, visibly apprehending one or two street negotiators quickly would eliminate most of the tourist shadow market activities. The reason these things are not done may be due to the large amount of Soviet time and accounting skills required for spot-checking tourists’ expenditures and receipts. Moreover, the Soviet overall image and reputation as a pleasant travel destination would be harmed. However, this only addresses the question of why international tourist expenditures and receipts are not checked more closely. Soviet Buyers
The second consideration is why the Soviet authorities do not stop the underground trading by policing the buyers’ or wholesalers’ agents.’ The government appears to be uninterested in the activities of the buyers, at least when they are negotiating with the sellers. Officials may be primarily concerned with the activities of large wholesalers or transactions involving illegal substances or foreign currencies. Buyers could be prevented from openly operating by aggressive arrest and punishment. Substantial punishment would severely limit transactions. The well-honed bargaining skills demonstrated by Soviet merchants include calculation of the cost of apprehension and punishment. The question of why the trading is allowed to continue remains. Symbiotic
Economies
The streets and entertainment centers of Moscow and Leningrad are peppered with symbols of the West and its goods. Westemstyled products are status symbols for the youth. In turn, reports indicate extensive dissatisfaction with Soviet consumer goods
420
MAY FISH and LYNN
(Goldman, 1988: 195; Millar, 1988: 179-81). The third explanation of tolerance of shadow trading is that the government allows illegal transactions in western goods because it saves its scarce hard currency. When international goods are sold in the shadow market, payment usually is in Russian goods or rubles. In the mainstream economy the items are usually imported officially and purchased with hard currency. The result of allowing shadow on the one hand, provides the activity, wealthier Soviet citizens with international goods at an exorbitant price in rubles and, on the other hand, allows a limited loss of international or hard currency. The only perceivable loss is that the seller may buy Soviet goods with rubles from the shadow trade instead of converting his or her hard currency to rubles. Thus, to stop the relatively insignificant illegal trading between international tourists and freelance Soviet merchants would be of little benefit to the overall Soviet economy (Lane, 1985:64-67).
ACKNOWLEDGEMENTS The authors thank Vergil L. Williams, Professor of Criminal Justice, and Walter S. Misiolek, Professor of Economics, at The University of Alabama for their helpful suggestions.
EDWARDS
desirable goods and services quality apparel and state-of-the-art durables-are underpriced by very large margins. Runs on periodically scarce commodities in retail outlets tend to make these items scarce all the time. Underpricing must, in addition, tempt many Soviet citizens into undertaking illegal middle-man activities in black and grey markets in order to collect the difference between actual and equilibrium prices. ” 3. Mead (1986:446) concluded: “Up to a point, the Soviet system can still conceal its own internal difficulties, particularly those in the political sphere, but the problems are now such that even the most myopic tourist will notice that the system is not working as smoothly as the courier will proclaim. In fact, Western tourists on short package vacations will most likely be struck by a series of paradoxes. On the one hand the museums, theaters, ballet performances, hotels and restaurants they are shown will seem exemplary. But against that, why should the waiter during the evening meal back at the hotel offer to exchange local currency at dramatically better rates than those offered in the state banks? Why should the taxi driver ask if you have anything you want to sell? Why should the hotel maid try to persuade you to sell her your rather old pair of shoes?” 4. “People going to the West will usually bring back hard currency through illegal work something (which will eventually find its way back into the state’s coffers through the black market or hard-currency shops); or at the very least material goods that are scarce in state shops, thus easing to some extent the strains on the domestic consumer market” (Mead, 1986:448). 5. Gifts of bubble gum, candy, and other items are often given to the children by tourists as gifts or tokens of friendship. But there also are market transactions between the children and the tourist that may involve exchanging Soviet medals and military insignias and knickknacks for hard currency and western goods. There is an abundance of replicas of military memorabilia available for exchange. 6. The hard currency
stores (only hard currencies are visitors illustrate the Soviets’ desite to conserve western currencies. Hotels maintain hard currency bars that stay open longer hours than other bars. used) for international
NOTES 1, Millar (1981: 96) pointed out that illegal retail activities are complex and vast at the misdemeanor level in the Soviet Union. He explained that “a large proportion of the Soviet urban population is implicatedat least on a petty level. Soviets talk of obtaining goods nalevo (on the left), po znakomsrli (through a contact), no chernom tyke (on the black market), and pu blatu (through pull).” Katsenelinboigen ( 1977 :63) assigned colors to the Soviet markets and classified them as legal, semilegal, and illegal. The brown market transactions include legal consumer goods imported privately and goods sold by visitors from abroad as semilegal. But both semilegal and illegal commodities handled by “currency and foreign clothing speculators” and prostitutes are illegal. 2. According to the observations of Millar (1988:18485), “There can be no doubt that demand exceeds supply for most quality commodities and services in stateoperated retail outlets. This is because many of the most
7. A signal of the Soviets’ eagerness to attract westem tourists was their July 1987 overture to Donald J. Trump to discuss his building of two luxury hotels in the U.S.S.R. 8. Mead (1986:448-49) stated: “Officially, Soviet citizens are not allowed to possess hard currency. Inevitably, however. there is a black market, dealing not only in goods and services but also in currency exchange at rates more favorable to the Western visitor than the officially stated rate. Dealing in currency is illegal, and is a serious offense both for visitors and Soviet citizens. ” 9. Many of the restrictions on small-scale enterprises were removed with the May 1987 legalization of smallscale service businesses, such as restaurants, car mechanics, and musicians. It is suggested that this is an attempt to bring these underground businesses into the mainstream economy.
Shadow
Trading
by International
REFERENCES Adams, J. (1972). Why the American tourist abroad is cheated: A price-theoretical analysis. Jour Pal Econ 80:203-07. Fish, M. (1984). Deterring sex sales to international tourists: A case study of Thailand, South Korea, and the Philippines. International Journal of Comparative and Applied Criminal Justice 8 : 175-86. Goldman, M. (1988). The consumer. In The Soviet Union today: An interpretive guide, ed. J. Cracraft, 191-97. Chicago: The University of Chicago. Katsenelinboigen, A. (1977). Coloured markets in the Soviet Union. Sov Stud 24:62-85. Lane, D. (1985). Soviet economy and society. Oxford, United Kingdom: Basil Blackwell Publishers, Ltd. Latimer, H. (1981). Consumer and producer surpluses in tourism. International Journal of Tourism Mangement 2: 147-61. Lehmann, A. (1980). Tourists, black markets and re-
Tourists
in the Soviet Union
421
gional development in West Africa. Annals of Tourism Research 7 : 102- 19. McPheters, L., and Stronge, W. (1974). Crime as an environmental externality of tourism: Miami, Florida. Land Econ 50: 288-92. Mead, G. (1986). Tourism in the Soviet Union and Eastern Europe. In The Soviet Union and Eastern Europe, ed. G. Schopflin. Great Britain: Muller, Blond and White. Millar, J. (1981). The ABCs of Soviet socialism. Urbana, IL: University of Illinois Press. (1988). An overview. In The Soviet Union today: An interpretive guide, ed. J. Cracraft. Chicago: The University of Chicago. Pizam, M. (1978). Tourism’s impacts: The social costs to the destinations as perceived by its residents. Journal of Travel Research 14:8-12. Rothman, R. (1978). Residents and transients: community reaction to seasonal visitors. Journal ofTrave Research 16:8-13.
ofCrimim1 Justice Vol. 17, pp. 417-427 All rights reserved. Printed in U.S.A.
SHADOW
O&%7-2352/89 $3.00 + .OO Copyright 01989 Pergamon Press plc
(1989)
TRADING BY INTERNATIONAL THE SOVIET UNION
MARY
TOURISTS IN
FISH
Department of Economics and Finance Manderson Graduate School of Business College of Commerce and Business Administration The University of Alabama Tuscaloosa. Alabama 35487
LYNN EDWARDS Department of Management and Marketing Manderson Graduate School of Business College of Commerce and Business Administration The University of Alabama Tuscaloosa. Alabama 35487 ABSTRACT International travelers ofien participate in the large shadow economy operating in the Soviet Union. Many international travelers who are accessible to indigenes become suppliers in the Soviet underground markets. Tourists appear to be free to carry out these semilegal to illegal transactions without harassment or government interference unless they are dealing with drugs or illegal currencies. The explanation for this lack of deterrence may be in the symbiotic interaction between the Soviet official and alternative economies. International tourists operating in the shadow economy lessen consumer pressures in the Soviets’ overall economic system
INTRODUCTION
The criminal justice, economic, and tourism literature has a paucity of information about illegal tourist activities because they are clandestine (McPheters and Stronge, 1974; Pizam, 1978; Rothman, 1978). Yet, it is well known that international travelers engage in illegal economic activities in a variety of goods and services in many places in the world. These activities are not unique to travelers with given nationalities or to specific host countries. Illegal exchange of currencies fre-
quently occurs in countries where the official exchange rate is out of line with the market rate. Like domestic traders, international tourists buy illegal substances when they are available. The vivid pictures depicting the punishment for drug smuggling in the Malaysian and Singapore international airports point to the potential for these activities. When tourists are involved in prostitution, gambling, and similar less serious types of victimless crimes, their offenses are usually overlooked by law enforcement authorities in the host countries (Fish, 1984).
417
418
MAY FISH and LYNN
Underground or shadow economic transactions represent an important part of the dayto-day activity in the Soviet Union. Lane (1985: 65) quoted Soviet emigres as estimating the shadow economy to be ten to twelve percent of total income and three to four percent of the country’s gross national product. This analysis concerns the shadow (semilegal and illegal) transactions between intemational tourists and residents of the Soviet Union involving the exchange of western goods for rubles or Soviet goods.’ The Soviet motive is to buy western goods that are unavailable or too expensive on the legal market, and the tourist motive is to gain a potential profit.2 Government deterrence appears to be nonexistent or at best minimal. Following presentation of a profile of the tourists’ shadow transactions, three possible reasons for the Soviets’ applying only minimal deterrence to these clandestine activities are discussed.
TRANSACTIONS Observant travelers in the Soviet Union are immediately aware of the large amount of undisguised shadow transactions occuting between visitors and indigenes.3 Before visiting the Soviet Union, international travelers may be alerted to these activities by former visitors. Some suggest that the traveler bring extra items to sell. Finnish visitors often spend weekend holidays in Leningrad, which are with their shadow heavily subsidized transactions.4 In the Soviet Union international tourists are approached by indigenes on the streets and other public places or in taxis to exchange select items owned by the tourist for rubles or a Soviet product. The operations seem to follow a similar scenario. The buyers are men and women between eighteen and thirty-five years of age. The English they speak is fluent or semifluent. They shop for select items among the tourists, who are accessible while they are sightseeing or visiting places of interest. In most cases the buyers appear to be purchasing agents who watch the streets with a list of items furnished by a wholesaler or client. The western consumer goods of prime
EDWARDS
interest are items such as jeans, back packs, tie shirts, sweat shirts, cassette players and tapes, radios, tennis shoes, imported cigarettes, calculators, and cosmetics, including fingernail polish. Examples of Soviet goods offerred in payment are furs, lacquer boxes, and military uniforms and buckles. Younger tourists are more apt to be carrying the goods that are in demand. The items openly exchanged are usually not illegal or, at worst, they are semilegal, but the transactions are semilegal or illegal. The Soviets resell the goods in flea markets, under the counters, or in their homes. The professional Soviet wholesaler may have several clandesdine sales locations known to his or her agents and customers. 5 The buying agents work on commission. This is verified by the amount of rubles they are willing to pay for a single transaction involving several items, such as a cassette player, a nearly new sport jacket, and a pair of men’s Nike tennis shoes in good condition. The total price will be between the ruble equivalent of $600 to $800, an amount which indicates underlying financial support. The selling price usually is four to six times the original purchase price in U.S. dollars, depending on the item and its condition. Items that symbolize western culture, for example, a Harvard sweat shirt or a New York Yankees cap, can be sold at a premium. Bargaining skills that represent considerable practice in their underground economy are clearly demonstrated by the Soviet buyers. An example of their application is that the buyers, in most cases, will ask the seller to quote a price. Economists maintain that this establishes the seller’s top price and, thus, prevents the buyer from offering a higher price than necessary to purchase the goods (Adams, 1972; Latimer, 1981). This is often the taxi driver’s bargaining style. It is also used on the street, but there probably to attract the attention of the tourist as well. Another illustration of the sophistication of market negotiations is the prowess of taxi drivers in Moscow. When a tourist asks to be taken from one hotel to another, the driver may quote the price in Marlboro cigarettes. The naive tourist who does not smoke may
Shadow Trading by International Tourists in the Soviet Union
well say, ‘I have no cigarettes. n At that point,
the taxi driver or a nearby interpreter will explain that the tourist can walk into the hotel hard currency shop and buy the Marlboros with dollars.‘j The dollar price of the cigarettes is lower than the ruble/dollar exchange rate of the taxi ride because the ruble price of Marlboros is higher than the dollar price. The taxi driver is paid the value of Marlboros in the Soviet economy. Thus, the tourist is paying less than the actual value received by the driver.
DETERRENCE The Soviet authorities are well aware of these semilegal and illegal transactions. Since the goods are not illegal, they can be used. The illegal transactions, per se, are the offense (Katsenelinboigen, 1977 :62-63). The transactions are carried out in the middle of Red Square or on a main street in Leningrad or Moscow at midday. Entrance identification required by the hotels where intemational visitors stay is not a preventative since buyers often conduct activities in the travelers’ hotel rooms. There are several possible reasons why the Soviet government allows this shadow market to operate with little deterrence. Three are suggested here. The last explanation seems the most likely. International
Tourists
First, the Soviets encourage international tourism both to collect much-needed hard currency and to develop a favorable world political image (Mead, 1986 : 445) .’ Visitors entering the U.S.S.R. list all currencies and valuable items, such as gold jewelry, brought into the country. Suitcases are sometimes searched by customs officials. Rubles can be legally purchased with other currencies only in the Soviet Union and only at govemmentdesignated banks. All legal currency exchanges are registered by the bank.* When the visitors leave the country, customs officials could check import declarations and all receipts and exchanges. All tourists interviewed reported that this was not done when
419
they left. Certainly, spot-checking one out of every twenty international tourists would discourage illicit trade. Signs or instructions indicating that receipts will be checked clearly would stop significant trading. If this were done, all the benefits from shadow transactions would have to be consumed by the seller within the country. In addition, visibly apprehending one or two street negotiators quickly would eliminate most of the tourist shadow market activities. The reason these things are not done may be due to the large amount of Soviet time and accounting skills required for spot-checking tourists’ expenditures and receipts. Moreover, the Soviet overall image and reputation as a pleasant travel destination would be harmed. However, this only addresses the question of why international tourist expenditures and receipts are not checked more closely. Soviet Buyers
The second consideration is why the Soviet authorities do not stop the underground trading by policing the buyers’ or wholesalers’ agents.’ The government appears to be uninterested in the activities of the buyers, at least when they are negotiating with the sellers. Officials may be primarily concerned with the activities of large wholesalers or transactions involving illegal substances or foreign currencies. Buyers could be prevented from openly operating by aggressive arrest and punishment. Substantial punishment would severely limit transactions. The well-honed bargaining skills demonstrated by Soviet merchants include calculation of the cost of apprehension and punishment. The question of why the trading is allowed to continue remains. Symbiotic
Economies
The streets and entertainment centers of Moscow and Leningrad are peppered with symbols of the West and its goods. Westemstyled products are status symbols for the youth. In turn, reports indicate extensive dissatisfaction with Soviet consumer goods
420
MAY FISH and LYNN
(Goldman, 1988: 195; Millar, 1988: 179-81). The third explanation of tolerance of shadow trading is that the government allows illegal transactions in western goods because it saves its scarce hard currency. When international goods are sold in the shadow market, payment usually is in Russian goods or rubles. In the mainstream economy the items are usually imported officially and purchased with hard currency. The result of allowing shadow on the one hand, provides the activity, wealthier Soviet citizens with international goods at an exorbitant price in rubles and, on the other hand, allows a limited loss of international or hard currency. The only perceivable loss is that the seller may buy Soviet goods with rubles from the shadow trade instead of converting his or her hard currency to rubles. Thus, to stop the relatively insignificant illegal trading between international tourists and freelance Soviet merchants would be of little benefit to the overall Soviet economy (Lane, 1985:64-67).
ACKNOWLEDGEMENTS The authors thank Vergil L. Williams, Professor of Criminal Justice, and Walter S. Misiolek, Professor of Economics, at The University of Alabama for their helpful suggestions.
EDWARDS
desirable goods and services quality apparel and state-of-the-art durables-are underpriced by very large margins. Runs on periodically scarce commodities in retail outlets tend to make these items scarce all the time. Underpricing must, in addition, tempt many Soviet citizens into undertaking illegal middle-man activities in black and grey markets in order to collect the difference between actual and equilibrium prices. ” 3. Mead (1986:446) concluded: “Up to a point, the Soviet system can still conceal its own internal difficulties, particularly those in the political sphere, but the problems are now such that even the most myopic tourist will notice that the system is not working as smoothly as the courier will proclaim. In fact, Western tourists on short package vacations will most likely be struck by a series of paradoxes. On the one hand the museums, theaters, ballet performances, hotels and restaurants they are shown will seem exemplary. But against that, why should the waiter during the evening meal back at the hotel offer to exchange local currency at dramatically better rates than those offered in the state banks? Why should the taxi driver ask if you have anything you want to sell? Why should the hotel maid try to persuade you to sell her your rather old pair of shoes?” 4. “People going to the West will usually bring back hard currency through illegal work something (which will eventually find its way back into the state’s coffers through the black market or hard-currency shops); or at the very least material goods that are scarce in state shops, thus easing to some extent the strains on the domestic consumer market” (Mead, 1986:448). 5. Gifts of bubble gum, candy, and other items are often given to the children by tourists as gifts or tokens of friendship. But there also are market transactions between the children and the tourist that may involve exchanging Soviet medals and military insignias and knickknacks for hard currency and western goods. There is an abundance of replicas of military memorabilia available for exchange. 6. The hard currency
stores (only hard currencies are visitors illustrate the Soviets’ desite to conserve western currencies. Hotels maintain hard currency bars that stay open longer hours than other bars. used) for international
NOTES 1, Millar (1981: 96) pointed out that illegal retail activities are complex and vast at the misdemeanor level in the Soviet Union. He explained that “a large proportion of the Soviet urban population is implicatedat least on a petty level. Soviets talk of obtaining goods nalevo (on the left), po znakomsrli (through a contact), no chernom tyke (on the black market), and pu blatu (through pull).” Katsenelinboigen ( 1977 :63) assigned colors to the Soviet markets and classified them as legal, semilegal, and illegal. The brown market transactions include legal consumer goods imported privately and goods sold by visitors from abroad as semilegal. But both semilegal and illegal commodities handled by “currency and foreign clothing speculators” and prostitutes are illegal. 2. According to the observations of Millar (1988:18485), “There can be no doubt that demand exceeds supply for most quality commodities and services in stateoperated retail outlets. This is because many of the most
7. A signal of the Soviets’ eagerness to attract westem tourists was their July 1987 overture to Donald J. Trump to discuss his building of two luxury hotels in the U.S.S.R. 8. Mead (1986:448-49) stated: “Officially, Soviet citizens are not allowed to possess hard currency. Inevitably, however. there is a black market, dealing not only in goods and services but also in currency exchange at rates more favorable to the Western visitor than the officially stated rate. Dealing in currency is illegal, and is a serious offense both for visitors and Soviet citizens. ” 9. Many of the restrictions on small-scale enterprises were removed with the May 1987 legalization of smallscale service businesses, such as restaurants, car mechanics, and musicians. It is suggested that this is an attempt to bring these underground businesses into the mainstream economy.
Shadow
Trading
by International
REFERENCES Adams, J. (1972). Why the American tourist abroad is cheated: A price-theoretical analysis. Jour Pal Econ 80:203-07. Fish, M. (1984). Deterring sex sales to international tourists: A case study of Thailand, South Korea, and the Philippines. International Journal of Comparative and Applied Criminal Justice 8 : 175-86. Goldman, M. (1988). The consumer. In The Soviet Union today: An interpretive guide, ed. J. Cracraft, 191-97. Chicago: The University of Chicago. Katsenelinboigen, A. (1977). Coloured markets in the Soviet Union. Sov Stud 24:62-85. Lane, D. (1985). Soviet economy and society. Oxford, United Kingdom: Basil Blackwell Publishers, Ltd. Latimer, H. (1981). Consumer and producer surpluses in tourism. International Journal of Tourism Mangement 2: 147-61. Lehmann, A. (1980). Tourists, black markets and re-
Tourists
in the Soviet Union
421
gional development in West Africa. Annals of Tourism Research 7 : 102- 19. McPheters, L., and Stronge, W. (1974). Crime as an environmental externality of tourism: Miami, Florida. Land Econ 50: 288-92. Mead, G. (1986). Tourism in the Soviet Union and Eastern Europe. In The Soviet Union and Eastern Europe, ed. G. Schopflin. Great Britain: Muller, Blond and White. Millar, J. (1981). The ABCs of Soviet socialism. Urbana, IL: University of Illinois Press. (1988). An overview. In The Soviet Union today: An interpretive guide, ed. J. Cracraft. Chicago: The University of Chicago. Pizam, M. (1978). Tourism’s impacts: The social costs to the destinations as perceived by its residents. Journal of Travel Research 14:8-12. Rothman, R. (1978). Residents and transients: community reaction to seasonal visitors. Journal ofTrave Research 16:8-13.