John & Rosalind Wolfenden on the banks of the Volga in Tver

One of Moscow's domestic airports on the southern rim of the city: a day long blizzard has halted all traffic, and one has one's first experience of enforced patience. On that 1995 journey to Siberia, it took seven hours before the runway was clear and the Tupolev 154 could make its daily flight to Tomsk. But it was the beginning of a new experience, living and working in Russia, observing the roller-coaster ride that the country has taken on the road to a new economy and politics. In brief, I spent eighteen months in Siberia between February 1995 and August 1996 with visits through 1997 to Krasnoyarsk and Vladivostok, and in November 1998 I started a two year contract in Tver - between Moscow and St. Petersburg - which is just about to end.

Tomsk is an old settlement founded by the Cossacks pushing east in 1604. It commanded a river crossing on the old post road from Moscow to Vladivostok - a journey which took forty days on horseback - but its merchants refused to permit the Trans-Siberian Railway to pass through, judging it to be unwelcome competition. As a result Tomsk found itself 80 kilometres away from the new railway but preserved much of its wooden architecture - log walled buildings with the most intricate shuttering and detail. It became and still is a centre of university education serving Western Siberia - and more notoriously a small suburb on its northern edge was the site of one of the eight plutonium factories for the Soviet cold war machine. This is still a restricted area, now reprocessing spent nuclear fuel, and in fact bringing employment and income to many Tomsk inhabitants. But it took me a little time to find out that what appeared to be a large malfunctioning digital clock in the city office was in fact the daily radiation count.

In 1994, the European Bank for Reconstruction and Development (EBRD) set up a Russia Small Business Fund to provided dollar denominated small loans for the new businesses which were being created in the new economy. Initially three centres were chosen outside Moscow to test the new loan programme and one of these was Tomsk. Each city was to have a Business Advice and Training Centre, and it was the BATC in Tomsk that was my responsibility. Essentially the task was to provide as much business training as possible to start up businesses and encourage small businesses to apply for the new loans. 1994 had seen a burst of inflation and rapid devaluation of the rouble, but by 1995 the situation had stabilised and in 1996 the optimism of 1993 had returned. However, Russian banks were still making loans for three-month periods only and at punitive rates of interest, so dollar based loans were important if any business investment was to take place. Our small office was busy, because EBRD policy did not allow us to charge for our services, and the loan programme itself built up a successful portfolio of loans.

'urban islands in the forest'

Siberia seemed to be endless plain covered in silver birch and red pine but overarched by the most brilliant blue sky. The collective farms were dairy based with herds of 150 cattle grazing summer pasture created from the clearing of the forest. A horseman would follow them helped by one or two children on foot. The cities are but urban islands in the forest. The region of Tomsk is the same area as Poland but with only 1.1 million inhabitants and half of those live in Tomsk itself. As a consequence distribution of goods in an empty land is an expensive business and the role that the small traders play in taking goods to market very important. The sound of traders taping up their packages to make them secure while waiting for the overnight flights from Moscow to their Siberian cities is an unforgettable cacophony.

And so on the streets the traders in their kiosks sell all the small domestic items the consumer now expects from the new economy. The old shops continue to sell the staples - bread and beer, cucumbers and vodka and the dairy products processed from the milk of the collective farms. Every city will tell you that its vodka is the best in Russia. Russian champagne made in Novosibirsk and sold at the equivalent of £2 a bottle is very good but their cognac is not! The desire of regional administrations to ensure the survival of local manufacture of these staples is understandable in their attempts to minimise the cost of living and partly understandable through the ancient fear of national shortages.

'the small windows designed to keep the cold out prevented one ever looking in'

In 1995 it look a little while to find what each shop sold - advertising what everyone knew was seen as a waste of effort - and the small windows designed to keep the cold out prevented one ever looking in. Eating in one's flat involved a narrow choice of menu, and Saturday visits to the central market produced cuts of meat that could only be casseroled. The meat markets have not changed in the last five years and the thudding of axes and, in the summer, the smell of raw flesh are in reality unchanged from the nineteenth century. Russians like ice-cream and one of my first memories of Tomsk was the old ladies selling local ice-cream on the streets in the winter, using zipped up cool-bags to keep their wares at an edible temperature of -3C: the air temperature being -20C! I returned to Tomsk for a brief visit in October 1999 and the changes clearly demonstrated the growth of the local economy with new western style retailing replacing much of the kiosk culture and new cafés and restaurants bringing western style fast food to the large student population.

'the intellectual centre of the space race'

Krasnoyarsk is 600 kilometres further east: a colleague and I made many visits in 1997 supporting an American led programme to create a business training network across the Russian Federation. The city is halfway between Moscow and Beijing, and the only reason for its existence was the strategic relocation of the military-industrial complex after the German invasion of 1941. In the 1950s it became the intellectual centre of the space race and our work with the Siberian Space Academy, which bizarrely had been selected for the business training programme, allowed us to see glimpses of it history-making past. The city lies on the River Yenissey which flows 4000 kilometres from Mongolia to the Arctic. We learnt more about Siberia than the Academy learnt about business training. Its geography and its power politics - centred on the giant aluminium smelters in the south of the region - made for many problems and resulted in a very slow approach to the creation of a suitable business infrastructure. But affairs in Vladivostok were far worse where rampant corruption and the collapse of the far-eastern fleet made economic progress for the vast majority of the population impossible. Our Russian counterpart in the business training programme amazed us one day by arriving in the uniform of a colonel of the customs service. Thereafter progress faltered.

In August 1998, the Russian economy also faltered hit by a banking crisis precipitated by the Russian government's inability to pay its debts. By coincidence a project in NW Russia, part of the European Union's business support programme for Russia, was just about to start. I was part of the winning proposal, mostly by chance, and I flew back to Russia on 1st November to Moscow en route for Tver - 150 kilometres to the north-west of Moscow. The task was to set up two Business Consulting Centres, which after two years would continue as independent and profitable businesses. With EU projects there is a diplomatic framework for the overall programme and a formal beneficiary - for this project, the Tver Regional Administration's Committee of Economics. Much then depends on the effectiveness of the Regional Administration, and in Tver our project team has been well supported and the main purposes of the project have been achieved.

Tver is a pleasant city with a mixture of the old and new economies. There are one or two western style supermarkets with checkouts rather than the frustrating system of triple queuing found in the traditional shops. There one queues to order what one wants and then queues to pay for it and then again to collect it. As the regional capital, the city has its own concert hall and semi-professional orchestra with many invited performers from Moscow. The programme of concerts runs from September to May and is of a high standard and a great pleasure. Like so much of the centre of Tver the hall was rebuilt in the early 1950s. The city was on the front line in 1941-1944 and as the crossing point of the river Volga suffered severely. Luckily a decision was taken to reconstruct the centre in its original nineteenth century style and there is very little Soviet concrete to be seen.

The project works with several different industrial sectors. There is a group of textile companies making both cloth and garments, many construction material manufacturers, a range of food processing businesses, a very large faience tableware manufacturer, and an excellent brewery. The economy is a genuine mix of nineteenth century industrial innovation and soviet era planning. The result is a constant struggle to survive with a lack of banking facilities (just beginning to ease), cash customers, and ever increasing foreign competition in consumer goods. The 1998 crash gave a temporary respite to this competition as the reduced value of the rouble gave domestic manufacturers an opportunity. The advantage has almost disappeared as inflation has stabilised and Russia's oil exports underpin the exchange rate. But the local economy is gradually improving and those living in the city are being paid in cash and that cash is circulating.

'the only cash is the old-age pension'

In the country it is a very different story where the only cash is the old-age pension, and the cottagers are left to fend for themselves. No federal money has been made available to the collective farms, most of which have fallen into disuse (and there is no legislation to allow for the sale and redistribution of land). The region's dairy herd has reduced to one eighth of its 1993 strength and the people live by subsistence smallholdings. Hay is still cut with a scythe and dried on wooden frames; small goat herds roam the old meadows, potato plots are a winter lifeline and those that can, bring their summer produce to sell in the city streets. In the autumn the mushroom crop is collected and sold in the same way - ceps and chanterelle are abundant. But nearly every city dweller has access to a dacha, usually with 600 square metres of vegetables, and in the autumn the underground storage spaces of the flats fill up with potatoes and preserved tomatoes and cucumbers. It is said that the younger generation will not continue the practice. The countryside is more and more the preserve of the older generation, some by choice, many with no choice, but in this northern climate one can only guess that the forest will spread and regain it ancient territory.

I have dwelt a little on the countryside because for a western European this vast area of forest is eye-catching. Its beauty is enhanced by the rivers. But it is a social and economic problem for the Federal government while being for all of us a huge and little known environmental asset. As ever there is a need for investment in the commercial forest and subsidy for those who live in it, but it is a very low priority in government economic planning.

Finally, Tver has the advantage of being two hours drive from Moscow and five hours train journey from St. Petersburg. Visits to the great cities offer rest and recreation on a formidable scale. In Moscow, the Bolshoi, the Conservatoire, and the Kremlin with its square of three cathedrals: in St. Petersburg, the Winter Palace, the river Neva and the concerts, ballet and opera of its many theatres. Russia has much to be proud of, but it finds it so difficult to share ideas and culture with the West. That is partly the purpose of the EU's programmes of support in Russia. It is a slow process, but for those involved a remarkable experience.

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