Already a Bloomberg.com user?
Sign in with the same account.
International -- Spotlight on the Czech Republic
A PLAYGROUND FOR `NEW RUSSIANS'...WHO ARE FLEEING CRIME AT HOME (int'l edition)
Each day, Olga Serebryankikova strides into Karlovy Vary's Pavlov Sanatorium, strips down, parks her ample frame on a marble bench, and has an assistant encase her in hot thermal mud. And that's just for starters. "This afternoon, I'll have a swim and a massage. Tonight, we're going to the opera," the Moscow matron sighs contentedly. "I'm satisfied."
She's not alone. For centuries, the Czech town of Karlovy Vary (better known abroad by its German name, Carlsbad) has been a mecca for Russian visitors looking to stave off old age. Peter the Great swore a dip in the thermal springs improved his sexual potency. Tolstoy tossed back a gallon a day of the sulphur-rich waters in a bid to improve his digestion. Under communism, trade unions sent model workers on all-expenses-paid junkets.
But only since the fall of the old regime has the spa lived up to its nickname of "Little Russia." In the past five years, the annual influx of Russian-speaking visitors has increased more than fivefold. Of the 50,000 tourists who visited last year, around 60% hailed from the former Soviet Union. For the most part, though, these aren't the honest toilers of Soviet myth. These are "New Russians," who one way or another amassed fortunes in hard currency while their compatriots saw the ruble buy less and less. Three of Karlovy Vary's grandest art nouveau hotels are now Russian-controlled and cater almost exclusively to citizens of the erstwhile Soviet states. The Moscow City government even maintains a consulate here for those who want to mix business with pleasure.
With the collapse of the ruble this summer, local traders are looking forward to even bigger business. "The worse things get at home, the more they look for a haven from the madness," insists Bohumil Prochazka, director of the town's Pentalog Tour agency, a subsidiary of the Hotel Imperial, Karlovy Vary's largest, which caters to Russian-speakers. Prochazka even says he's thinking of increasing his company's block bookings on the weekly shuttle flights from Moscow that both Czech Airlines and the Russian carrier Aeroflot Airlines began running in early 1998.FAST MONEY. The ruble disaster also seems to be prompting Russian visitors to stock up against the future. "They're buying more than ever before--mostly gold and pearls and garnets," says Lenka Sulcova, manager of a jewelry emporium opposite the Colonnades, a 19th century neoclassical arcade that houses the most popular thermal springs. "And they always pay cash. Always." For those who can afford it, Karlovy Vary offers another nest egg just as durable: property. The town's daily Russian language expat newspaper, Karlovyvarskoye Novosti (Karlovy Vary News) has begun running a full-page "property of the day" advertisement offering apartments and well-preserved mansions in the wooded hills that surround the town. Although Czech law forbids foreigners to purchase real estate unless they do so through a registered business, that's a minor inconvenience for many of the paper's readers. "They can set up a company in 48 hours. They can transfer money from dollar accounts in two hours," says editor Jiri Chmelik. "These aren't the kind of men to let anything get in their way."
While local traders scoff at police denials of big-time underworld action, few seem worried their hometown will turn into a latter-day 1930s Chicago. "I know these people are here, but criminal activity in the town itself is minimal," says Sanitorium No. 5 manager Jana Jezkova. "You don't have shootings here. You don't see drugs here. You don't see whores on the street."
In fact, most of the area's 500 or so full-time Russian inhabitants left their homeland in the first place out of fear of rising crime, says longtime Karlovy Vary resident Maxim Blaha. "In Russia, if you do well, you're a target for kidnappers, for blackmailers, for criminals," says Blaha, a real-estate businessman who arrived in the early 1990s after buying a South American passport and having his freshly minted Czech surname inserted. "The ideal is to have a little business here, live here with your family, and commute to Moscow." After all, he says, despite the recent troubles, that's still where the real money is.By James Drake in Karlovy VaryReturn to top