(Bloomberg Markets) -- To open Bloomberg’s first news bureau in Eastern Europe—and the fourth for the company in all of Europe—the directions were simple: Identify a space that was suitable for a big international financial firm but had something “wrong” with it. In other words, not too perfect. As a young company, we didn’t want to come off as arrogant. So in Prague, in 1993, we found an office with a fabulous view directly onto Old Town Square’s famous clock tower, with just one catch: It could only be reached by walking up five flights of steep, worn, stone stairs. We rapidly hired local staff in Prague, and then expanded to Warsaw and Budapest, working from apartments or hotel rooms until we secured new offices. Moscow was the inevitable next step.
For me, personally, it was a natural progression. My last name is Ukrainian, although my family’s from a city that resides inside Belarus. My father’s mother was born in Russia, and my mother’s family is from a small town in Poland. I’m here because my Polish grandfather chose to leave in 1920, avoiding the fate of his relatives, who died during the Holocaust. While I was in college, where my adviser’s (short-lived) specialty was East Germany, I traveled to Communist Poland to research the Catholic Church’s influence on the opposition Solidarity labor movement and to interview then-union leader Lech Walesa.
After the Berlin Wall fell in 1989, I took a fellowship at a newspaper in Warsaw and by 1992 had moved to Prague to write about the evolution from communism to capitalism—a story I was excited about. Yes, there was corruption, and a variety of setbacks in the Czech Republic, Hungary, Poland, and Slovakia. But as governments dismantled state-owned enterprises and favored free markets, there was steady progress: Stock exchanges opened, corporate and state entities sold bonds, investors poured in.
In retrospect, my timing was perfect. Foreign journalists who had used Prague as a base to cover the region’s anti-Communist revolutions were bored by what they viewed as a more tedious financial and economic story. Their departure to cover the region’s next big political story in Yugoslavia provided me with an opportunity when Bloomberg came looking for stringers.
A freelance position quickly turned into a full-time role with a mandate to expand rapidly across the region. Bloomberg News coverage grew in line with sales of Bloomberg Terminals to local and foreign financial firms eager to profit as capitalism revived. I remember covering the Czechs’ first post-Communist euro bond sale, meeting scores of visiting international investors seeking early entry to the nascent stock markets, and chasing down fraudsters who inevitably preyed on some unsophisticated and greedy local bankers. We added stringers in such locations as Bucharest, Kyiv, and Sofia.
Even in those early days, the big money was looking at Russia. Every bank in the world was positioning itself to win business there, and Bloomberg expanded alongside Moscow’s financial markets. But the situation was much less clear there than in the Czech Republic, Hungary, and Poland. The story in Russia was all about government debt. Boris Yeltsin’s budget required the government to sell the equivalent of $1 billion in Treasury debt every Wednesday just to help finance payments, and the bond rates got out of control very quickly, exceeding 200% on occasion. Russia had no history of free markets and very limited experience with democracy. And the atmosphere felt different from my perch in Prague. While fancy restaurants and nightclubs opened in Moscow, many citizens across the vast country remained nostalgic for the Stalin years, when Russia saved the world from the Nazis. To them, the foreign bankers, investors, and even McDonald’s seemed like an invading army.
By 1998 it became clear that the biggest story in the region was unfolding in Russia. The boom was quickly turning to a bust. Pregnant with my first child, I was asked to move to Moscow. Just a couple of years earlier, our Moscow operation was based in a dingy room at the Olympic Penta Hotel, a crowded space that was sweltering because of the computer servers housed there for the growing number of Bloomberg Terminals in Russia. But we expanded fast, adding more employees and opening a modern office a few blocks from Red Square. The night before Russia stopped making payments on $40 billion of local bonds, I called the Kremlin to ask if a default was imminent. I’ll never forget the response: “There’s no fire. There’s no tragedy.”
Just as quickly as the economy crashed and foreigners fled, the rebound began and investment flowed in again. It showed me, I thought, that the financial markets were working, and the shift from communism to capitalism was secure. I delivered my son, Sasha, in a hospital on the outskirts of Moscow, and he soon grew fond of borscht and pelmeni. Sasha and his younger sister, Katya, both learned to speak Russian. Although we left the country in 2001, we maintained close ties and visited many times. In fact, Katya was planning to spend this summer in Russia.
But then came the horror of Russia’s invasion of Ukraine, and everything changed. Our journalists soon stopped reporting from Russia, and weeks later Bloomberg suspended all operations in the country, part of a wave of international companies that have scaled back, suspended, or ended business there. It was as if the clock had turned back 30 years, all of the financial evolution erased, all of the work and advancement evaporated. Bloomberg’s global newsroom continues to cover Russia from abroad as the country becomes increasingly isolated, severed from global markets, more like its former Communist self.
Three decades ago, I arrived in the region with so much hope and optimism that real change was taking hold: I was there to witness and chronicle the path from communism to capitalism; these economies stuck for so long behind the Iron Curtain were emerging for good. That hope and optimism seems so misplaced now. As Russia’s war rages in Ukraine, it’s clear that what I saw in Moscow, at least, was all an illusion.
Zelenko is the senior executive editor for standards, diversity, talent, and training in New York. This column doesn’t necessarily reflect the opinion of Bloomberg LP and its owners.
©2022 Bloomberg L.P.
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