Category Archives: EM

The jeepney: decentralized trust in practice

21 Thursday Feb 2019

Posted by in Decentralization, EM

≈ 1 Comment

Have you ever ridden in a jeepney? Chances are that you haven’t, for even if you have visited the Philippines, unless you are a backpacker, you would have stuck to taxis. In our travels, we met expats who had lived there for years but had never been in a jeepney.

Well, you are missing on a practical lesson how decentralized trust works.

The jeepney is actually the most popular public means of transportation in the Philippines. It was originally made from the American jeeps left over from WWII. It is also the cheapest way to travel because of its open rear door design, the jeepney can pick up and drop off passengers anywhere. Having said that, it is not the safest way of transport, either mechanically (too old), or because of its seating configuration (a long bench with no seat belts, very low ceiling, combined with constant and sudden stopping).

What was fascinating for me was actually how its payment system works: it is all based on trust. Decentralized trust in fact. As it is not optimal to have a ticket collector, the jeepney driver is also tasked with collecting the money for the trip. The problem is that the entrance is all the way in the back. Not only the driver cannot collect the fare in advance, but he has to rely on other passengers to pass on the money to him. Many times he has to pass back change. The fare also depends on the destination which is shouted as the money changes hands, which adds an additional variable to keep track of. All this while driving, so obviously the driver cannot possibly follow up on all this!

But the system works. Passengers can see who has paid and who has not and they have an interest to keep its integrity in check not because of a fear of a fine (light regulation with minimal monitoring) but the realization that if it breaks, it means everyone has to take the more expensive and less convenient bus. Of course the system can also be ‘gamed’: if ‘majority’ of the passengers agree to cheat but the level/cost of cooperation is too high.

As societies become more complex it is basically suboptimal to rely on a centralized authority. An additional complication is if those societies do not have a strong institutional infrastructure, like in most of EM, or the traditional sources of authority start to be mistrusted, like in a lot of the developed world.  Decentralized trust then becomes a necessity and a prerequisite for maintaining the proper functioning of society. It seems to me that EM has the first mover advantage here and is likely to leapfrog the developed world.

China’s credit expansion in perspective

28 Friday Dec 2018

Posted by in Debt, EM

≈ Leave a comment

Tags

There seem to be three aspects of the recent debate about China’s private credit build-up:

1) Is it excessive? Yes, but it is not extreme.

2) Has it been misallocated? Probably yes, but not necessarily more than in other countries now or in earlier stages of development.

3) How will the authorities handle the inevitable credit burst? That remains to be seen, but due to its unique political system, China seems to be more in control than other countries which have undergone a similar fate Question is whether this control will result in a positive outcome.

China’s recent credit build-up is indeed big: its recent private credit-to-GDP gap (a BIS indicator measuring the speed of credit creation now relative to its long-term trend) is currently the largest in the world. 

China’s credit build-up seems to have accelerated especially so after the great financial crisis in 2008. 

However, private credit creation growth in China reached a top (using four quarters MA of the credit gap as an indicator) sometimes in 2015 and has been decreasing since then. 


Indeed, China’s absolute private credit to GDP ratio is nowhere near some other countries’ extremes. 

It is the corporate sector which has levered… 

…with households still relatively unlevered. 

And of the corporate sector, most of the debt is concentrated in the SOEs. Finally, its government sector is unlevered,  leaving the total (private + public) credit to GDP even lower relative to majority of other countries. 

 

Bottom line is, China seems to have a lot of credit space left, giving it some room for “a beautiful deleveraging”.

The fact that most of the credit is in CNY gives a lot of flexibility of how that deleveraging is done – on China’s own terms (there is some foreign currency debt but a lot of it is either matched by corporate foreign currency assets or covered by the country’s own FX reserves).

Having travelled extensively throughout the whole country, I can confirm that there are ghost cities but the state of the overall infrastructure, pretty much everywhere, is first class, probably on par, or even better than most of continental Europe while putting US/UK infrastructure to shame. Having travelled also through all of Central Asia and after spending a month in the Philippines and now in Malaysia, I can also attest that the alternative, not spending so much on infrastructure, is infinitely worse.

So, by investing in real estate and infrastructure projects, and given its large population which is emerging from decades of under-development, is China misallocating more capital relative to:

  • the developed world, particularly, UK and US, where since the 1980s majority of credit created was against existing (unproductive) assets like residential real estate and financial assets for speculative purposes, leaving current infrastructure in a crumbling state? That’s in sharp contrast to the period between WW2 and the 1980s when credit was allocated to the production of goods and services and infrastructure projects like the interstate highway system in the US (a period more comparative to China’s developments now, and one largely heralded as the golden stage of economic growth).
  •  the developing world, which similar to China now is also in need of massive infrastructure development but instead national capital has been syphoned off to offshore wealth centres? Yes, there has been private capital outflow from China as well but it would have been much bigger had the capital account not remained closed.

It would take time before we know for sure whether the decisions Chinese leaders are making are beneficial for the country or not. It is fairly likely, though, that this credit expansion is not sustainable. Should this boom be followed by a bust, we could be fairly certain that the situation would be carefully managed by the authorities, unhindered by either hostile domestic political opposition, like in the majority of the democratic Western world or by foreign creditors, like in the majority of the developing world.

How would they handle it? If history is any guide, they did a pretty good job both during the Asian crisis in 1997/98 and the great financial crisis of 2008. Third time lucky?

I expect the authorities to continue building up the social safety net – pension and health care system – alongside expanding and improving the financial assets universe. They could simultaneously deflate the real estate bubble, by starving it of additional capital and inflate financial assets by encouraging diversification into them. Unlike, developed world countries where household wealth generally collapses during crises, Chinese households could come out unscathed from this as they are unlevered. In addition, any losses on their real estate portfolio could be offset by gains in their financial assets portfolio. Finally, with the right social safety net in place, they would also feel more secure for their future than before and therefore welcome such an outcome.

 

Note: All data used above is from BIS

Silk Road (8): China West to East

27 Thursday Dec 2018

Posted by in EM, Travel

≈ Leave a comment

Tags

I speak and speak, … but the listener retains only the words he is expecting. … It is not the voice that commands the story: it is the ear.

~ Marco Polo to Kublai Khan

 

Xinjiang

We had to stand in a single line even before entering the China border control building, with the border patrol officers strictly making sure the line is not broken. Everyone, except us, on that bus from Kazakhstan was either Kazakh or Chinese but we were not asked any questions by the
authorities – almost as if they were expecting us. However, after passing
through passport control I was pulled on the side and an officer went through my mobile phone pictures.

We did not know it then, but we ended up getting used to officials in Xinjiang province asking to check our identities and taking photos of us holding the passports open on the picture page. At the border crossing
they did that three times: first, on entering the building, second, during
‘official’ passport check, and the third time, at the exit of the building.

Once in China, we got picked up by one of Max’s friends and driven to the nearest town of Khorgos. The first thing that struck me there was how modern the town looked (given that it is a relatively small border town in
a undeveloped part of China). The second thing that surprised me was how high the level of security was. Even though we were aware of the Uighur ‘situation’ there, I had never seen anything like this on any of my previous travels (including the Bekaa Valley on the border of Lebanon and Syria when I visited it in 2000).

There were metal detectors and heavily armed police on the entrance of any public building. In fact, there were security on any building entrance. There were also military checks pretty much everywhere on the streets. Despite this we never felt unsafe or worried. The people did not speak
any foreign language but were extremely polite and accommodative.

We stayed in Khorgos for about a couple of hours, literally: just enough to get something to eat and get on the overnight train to Urumqi, the capital of Xinjiang. Incidentally, in Khorgos we discovered one thing that made our travel in the rest of China much less stressful: one can buy train tickets in the local post offices which are all over town!

Anyone who has traveled in a self-organized way in China would know that securing train tickets could generally be a hassle: foreigners cannot book online (easily and instantly – there are agencies which could do this, but it takes a few days and still need delivery of physical tickets), cannot use the ticket machines (need passport details which machines are not
designed to handle yet) and therefore, the only way to do it (until we discovered the post offices) is at the train stations.

In our experience most train stations, especially the ones for the super fast trains as they were recently built, are far out of the cities. Buying train tickets in advance, which was for us a necessity in the case of some of the most popular destinations, would have been we a waste of time and money if we had to go to the train station and back.

Moreover, the problem with train station ticket offices is that they are crowded and the officials do not speak much English (and find it very complicated to enter non-Chinese identify details). While one has those
same issues at the post office, there, at least they do not have the pressure of hundreds of Chinese travellers getting impatient and hustling because it takes longer than usual.

The other thing we realized immediately is that the only way we could participate in the local economy was through cash. For example, we
attempted to buy train tickets for our next destination once we arrived at
Urumqi train station from Khorgos, but couldn’t, as our credit cards were not accepted, we did not have enough cash and the only ATM machine there was out of order.

Away from top hotels and restaurants, non-Chinese credit cards, indeed, are not really welcome and everyone uses WeChat/Alipay otherwise. At least ATM machines would generally accept non-Chinese debit cards which meant that, as usual on this journey, we ended up travelling with a
decent amount of cash (we are four people after all).

China is not cheap. Part of it was due to our unwillingness to put up with the risks associated with real cheap lodging and food in a country where, we had heard, hygienic and safety standards might not be as
strict as ours. Part of it was due, though, to the demands of an intense local tourism business which must be pushing the prices of train, restaurant and hotel, more or less, on level with those in Europe. How is this possible, I thought at first? How can the average Chinese afford a $60 train ticket and a $100 hotel room? Well, because, the actual Chinese tourist is not of average income but their sheer size allows for that economy to flourish. When one considers that the Chinese middle class is
equal to the size of EU’s total population, then suddenly buying that $60 train ticket does not sound that crazy (and also explains that all the trains we took, without exception, were full).

We arrived in Urumqi in the very early morning with the ground covered in freshly fallen snow. We could not immediately check in our hotel but we left our luggage there and went around looking for something to eat. That’s when we discovered another peculiarity of China. Away from the really big cities, like Shanghai and Beijing or tourist centers like Hangzhou, generally speaking, there are no Western-style cafes. There are, of course, Chinese pastry shops, but they do not seem to start baking anytime before they open (around 9am or later) which means no pastry or bread before lunch time.

Coffee is not really a Chinese thing (the default is instant coffee), but the really big surprise, for us, was that restaurants in Western and North China do not serve tea. What is customary, though, is to be served plain hot water. In fact, there are hot water facilities everywhere but especially so in the trains and at train stations. It is very common to see people in that part of China carrying their special hot water bottles around with them everywhere. Georgia loves her tea and eventually she also bought a hot water bottle to enjoy everywhere we went.

We continued to notice heavy military presence everywhere in Urumqi as well. I don’t know whether it was related to the recent events, but all public parks were closed. There were military drills in the streets as well. In another flashback from my life behind the Iron Curtain, we witnessed
early morning police exercises including stretching and running in a circle in the public squares.

As we walked around the city (and we walked everywhere), we saw the police/military teaching common shop owners how to defend themselves
and what to do in case of riots. But, just like in Khorgos, we did not feel
unsafe at all. We stopped to observe these drills and the police did not seem to mind, apart from scolding the people they were teaching every single time they got distracted looking at us and not following their commands.

Despite its natural beauty and because of its remoteness, and especially because the government discourages travelling there, Xinjiang region is not popular with foreign tourists. In fact, I don’t think we saw any Western-looking foreigners in Urumqi. So, everywhere we went we were greeted
both with curiosity by the locals and with special attention by the authorities: double checking passports and taking more photos. In each case, though, done in a very friendly manner. If at first we found this special security attention amusing, after only three days there though, we had a bit too much of it. I was both happy to get on the fast train to Dunhuang and somewhat disappointed that we did not have a chance to venture out of the city to explore more of the natural beauty this part of China has on offer.

Gansu

The Gobi desert rises just outside of the city. I use ‘rise’ here intentionally as the Gobi is unlike any other desert I had ever seen and resembles more a small mountain: the sand dunes are massive.

Dunhuang used to be an important stop on the Silk Road, but was pretty much abandoned in the middle ages. It is not a big city by Chinese standards at all and nowadays is famous for the Mogao Caves, the first of which was built (yes, they are artificial) more than 1,000 years ago. The legend has it that an Indian monk, after wandering in the Gobi desert for days, had a vision of a thousand Buddhas (surprise, surprise!) and decided to stop and dig a cave there in dedication. Eventually, more and more caves were built at the site.

The caves are dug out in the rocks in the desert. There are hundreds of them but not all of them are open for visitors: we managed to see only 8. The caves obviously have a lot of archaeological significance (the largest collection of Buddhist art in the world on their walls) and carry a lot of history (the Library Cave, walled off until recently, contained thousand of
documents, among which, the oldest printed book, in more than a dozen different languages – most of these documents are now in museums in India and Britain, by the way).

The Mogao Caves complex is very well organized. On arrival, visitors are ushered in a very modern building and shown a 3D video of the history of the caves. Then they get on special buses which take them deep in the desert where the actual caves are. There, they cannot just wander off
unaccompanied by a guide. Finally, special high tech makes sure the air
pressure and consistency in the caves stay constant to ensure the longevity of the art there. Visitors cannot take any pictures inside.

There is some irony in all this. The archeological significance of the caves was only recognized fairly recently. For example, even in the early 20th century they were unguarded and anyone could go in unhindered. During the war, the government decided to use the caves as a prison for captured Russian soldiers, who vandalized a lot of the art in the caves. And even a couple of decades ago, the public could visit the caves without a guide. Definitely worth visiting if you are in the area, yet somehow, I think the Necropolis in Shiraz is more impressive.

Yet, it was the Gobi desert that I was really looking forward to visiting. On our way back into town for some street food for lunch, we struck a conversation with a young family, a rare occurrence as people generally do not speak English (or any other foreign language in that part of China).
They were so nice that they went out of their way to pick up their car and give us a lift to the desert on the outskirts of the city.

I have to say, nothing prepared me for the majestic sight of the Gobi desert. When I think of desert I imagine flat land but the sand dunes in Dunhuang suddenly rise out of nowhere as the city end approaches. It looks almost surreal. To top it off, among the sand dunes there is the so
called Crescent Lake: a real oasis in the desert, shaped like a crescent, thus the name. We took the whole afternoon and well into sunset to climb up and down the sand dunes. The kids had an awesome time sliding down, pretending they are on a ski slope.

The Chinese clearly enjoy spending time in the outdoors but, at the same time, they somehow seem to prefer to have as little contact with nature as possible. Not sure whether it has to do with a (convoluted) idea of
modernization and urbanization whereby the average Chinese thinks he has ‘made it’ coming out of the village with its agrarian lifestyle, but we saw it on numerous occasions visiting Chinese natural landmarks. For example, on the foot of the dunes here in the Gobi desert, you can rent special boots which protect your own shoes and socks from the sand. We, on the other hand, went the opposite way: even though, it was rather chilly, we took off our shoes and socks and went barefoot!

That evening, as we were wandering the streets of Dunhuang in search of an ATM we stumbled across a tiny family restaurant. It literally felt it was their living room as there were no other customers and the family’s two kids were doing homework on the table. The mother was helping the younger son while the father was in the kitchen. The kids were very curious to start a conversation as, it turned out, the older one was actually studying English. Still, their English was not on the level to allow us to order food (no menu and no pictures), yet we had already been well prepared for this language barrier. We had brought along a “Point It” book which had hundreds of photos separated by category: one could simply point to in order to have a basic communication.

It was a lovely evening during which there was a genuine connection between us despite the language barrier. Our kids read their English
books, while the Chinese kids, on the other hand, helped with Chinese
pronunciation.

Dunhuang is, unfortunately, not on the fast train line, and one has to take a 2h drive to the nearest “connection” – a strange choice by the Chinese as that fast train station is literally in the middle of nowhere. Anyway, from there we headed to our next destination of Zhangye.

This city is is much bigger than Dunhuang, and just like it, was
an important outpost along the Silk Road. So much, that Marco Polo decided to spend one year there – for which they erected a statue of him in one of the city’s squares. Apparently, the Mongol emperor Kublai Khan was born in the Dafu Temple in the city. What the latter is actually famous for is the longest wooden reclining Buddha in China.

We arrived in Zhangye in the evening, quite exhausted and hungry. We could not find proper transportation from the train station into the city and had no choice but to take one of the touts. Throughout Central Asia, that had never been a problem and we had taken many of them, but in China, we had heard many unpleasant stories. Anyway, we managed to negotiate a reasonable fare and we set on. As usual, I would follow the navigation on my phone, more out of curiosity than anything else, but this man would have none of it and was obviously irritated that I was doing it. We were communicating through the translation apps on our phones, which are not always right, but his comment was something like this, “I am a former China special forces, you should trust me!”.

Throughout our trip into town he was trying to convince us to take us to the Rainbow Mountains, another must see sight in the region, the following day. I had to politely explain that we would think about it and get back to him (I did take his number). When he dropped us off to the hotel he hanged around waiting for us to check in while discussing something with the receptionist. When he even requested to take a picture of our daughter, we did get a bit worried and we all grouped on it instead. We almost expected he might pop back at the hotel the next morning and were relieved that it wasn’t the case.

The hotel was in the town center, but the best way I can describe it is “dodgy”. There was this big neon sign in front of it which stated the room rates per night as well as per hour! The receptionist was smoking profusely all the time (disregarding the non-smoking sign) while checking us in. On the upside, however, he spoke decent English and was rather
polite.

We left our luggage and, despite the late hour, we hurried out to find something to eat. Normally, there would be lots of choices of
street food but in this case we could not find any. There were the usual
Western fast food places (KFC, McDonald’s, etc.) and the Chinese fast food ones (local joints which normally are better than the Western, but in this case they were infinitely worse as people were smoking inside). Eventually, we came across a second floor, decent looking, non-smoking, and rather inexpensive restaurant.

We sat down at a table and a couple of people came over to take our order (because of the late hour, the restaurant was rather empty). Of course, none of them spoke English and there was no menu with pictures. The “Point It” book turned out to be of no much help either. We slowly realized, that this was a ‘hot pot’, a typical restaurant for this part of China. The way it works is they put a pot with a specific sauce on a “fire” in the middle of the table and then customers choose vegetables and meat to go along. Sometimes, in the West, this is called “Chinese fondue”. They were very nice in that restaurant. To explain all this, they took Georgia to the kitchen and throughout our meal they were super helpful: it felt that we had a private dinner!

The following morning, we took off to see the natural beauty of the Rainbow Mountains but not before we stopped by the post office to buy the tickets to our next destination, Xi’an. In the bus to the mountains we struck a conversation with a Filipino who had a business in China and who
suggested that we should also visit Binggou Danxia, a rock formation, on the way to Zhangye Danxia (which is the Rainbow Mountains). It was a great choice! The place is amazing – in 2000, Binggou Danxia Landform was nominated by National Geographical Magazine as the world’s top ten magical geographical wonders. What was surprising, as we would soon discover on our subsequent tourist stops, was that it was deserted. We did, however, catch a sense of the Chinese “Disneyland-fixation” as they play loud music, the walking paths are well designated and everything is groomed.

We were so glad we had literally stumbled upon this natural wonder, that we stayed as long as we could before rushing to pick up the alleged bus to the Rainbow Mountains. The problem was that that bus never materialized. Not knowing when the next one would arrive we tried to hitch hike. After a few cars passed by with only a look of utter surprise on the face of the driver (and/or passengers), eventually one stopped a few meters afterpassing us, turned around and came to us. The driver was really nice and, I believe, genuinely wanted to help us but the problem was that we did not understand each other. We thanked him anyway but were getting worried a bit as it was getting late as well.

Luckily, just when we started to despair, a bus arrived, strangely going in the opposite direction, or so we thought. A couple of college kids inside spoke broken English and reassured us it would take us to our destination, so we boarded and after half an hour we were at Zhangye Danxia. This is the more popular tourist site in the region and it showed: hordes of Chinese tourists organized in buses to take them to see the colorful mountains. The scenery is spectacular, true, but somehow the way the trip was organized took a bit off the excitement being there: you get on a bus that takes you onto the first sightseeing spot, you get off, follow a well trodden path, take some pictures and get on a bus to go to the next spot. Can’t wander off, can’t go off the path as you are under the watchful eye of many officials always nearby.

The whole experience was more like going to the movies: if anything, everything was so efficiently done to limit any interaction with nature. Which makes me think that the Chinese would be perfectly happy and very open to the arrival of VR. It seems to fit nicely their culture and society. It was partially this, partially the fact that the evening was fast approaching and we needed to take a bus back into town, that we spent a rather short time there.

Back in Zhangye, we finally repaired my son’s phone, the one he broke in Yerevan which made him very happy! We were off to Xi’an the next day – to an extent this was kind of the end of the really exciting part of the Silk Road journey for me, as I and Georgia had already in the past visited all the cities, until Huangzhou, which we were about to visit again.

Shaanxi

As we had travelled from West to East along the Silk Road, a thought was reemerging. This is how, in general, ‘information’ flowed in
antiquity: the monks who travelled from India to China to spread Buddhism, for example. And then beyond China: we found out, actually, that the city of Kyoto in Japan was modelled after Xi’an.

I realized that there was very little I remembered from the last time I was in Xi’an in 2007: this was how much the city had changed. Our hotel was very close to the Bell and Drum Towers (after the experience in Zhangye, we decided to treat ourselves and stayed in a really fancy Art Hotel).
I did remember those but everything was different around them: two massive Starbucks, a KFC etc. and an array of high-end Western shops along the avenues leading to the Bell Tower.

Our ‘goal’ in Xi’an was to show the kids the Terracotta Warriors site. No doubt the extreme commercialization which we had started witnessing in all Chinese tourist attractions was in full swing there s well! Ok, the actual
site is still impressive, but everything around it was too much for me: the
buses, the stands selling everything, the overpriced restaurants. I would say, if you have never been there, it is worth going but some of the charm is definitely gone.

Yet, one can still learn something new and interesting in Xi’an. This city is old, one of the few cities, still standing, around the world to have a history spanning three millennia. For example, we spent almost a full day just walking along its city wall. The city is also the site of the tomb of the only female emperor in Chinese history, Wu Zetian. A former concubine, she was ruthless – actually deposing her sons from the throne to become Empress. Bu she was also efficient – allowing for advances in education,
improving taxation, and encouraging trade by reopening of the Silk Road.

Xi’an is also considered the ‘buckle’ that ties the belt together in the One Belt One Road idea thanks to its extensive rail network (the dark side of this industrialization is that usage of coal is still predominant which makes the city one of the worst polluted in China). But the Xi’an is also a pioneer in the digital sphere by becoming the first one in China to have its metro accept cashless QR code tickets linked with Alipay mobile payments. In fact, Xi’an has a New Software Park where Alibaba is planning to build its ‘Silk Road Headquarters’ to cover all of Western China (the name Xi’an, actually means “peace in the West”). Finally, Xi’an is also the home of
China’s space exploration program: it is planning to be the first nation to
reach the dark side of the moon!

 Beijing

The kids were actually really excited to visit the capitol. They had studied about China but the fact that China, aka ‘Beijing’, has been constantly in the news this year on account of the trade frictions, was a factor.

Beijing would turn out to be the most expensive city on our Silk Road Journey, so we had to resort to even more budgeting and planning carefully. For example, the hotel we booked was walking distance to the
Forbidden City and had amazingly considerate concierge (I am kidding, the hotel concierge did indeed help us order delivery for dinner and paid with their own personal Alipay account – we, of course, paid them back – but we did not plan this!).

Not that transportation is necessarily expensive in the city. The Metro is very affordable while DiDi, the taxi sharing company, supposedly the only large start-up in which all the three Chinese giants, Alibaba, Tencent and Baidu have stakes in, is infinitely cheaper than normal taxis. There are also the city bikes, which are the epitome of true sharing: they can be left anywhere in the streets as they can only be unlocked by QR codes on WeChat.

For all the talk in the media, Beijing, itself, is actually not really polluted if it was not for the industrial zones around it (for example, Shandong Province) and the proclivity for the wind to blow in its direction. Also, despite Shanghai considered the financial capital of China, there are more Fortune 500 companies headquartered there than anywhere else in
the world except Tokyo!

We spent a day enjoying the splendor of the Forbidden City, majestic as ever (and how I remember it – very big – as big as 28 football fields), lingering the streets in Hutong (massive change – I think it has shrunk by half from the last time we visited – and definitely lost its charm) and wandering the little shops (and antique tea houses) around Houhai lake. It
was in Beijing that we first saw such delicatessen as scorpions and snakes for sale in the street food markets.

The Great Wall of China was another day trip. Beijing is already very well strategically located, mountains on the north and west, with the Great Wall an added bonus for protection. We got unlucky a bit as the weather that day was bitterly windy but we toughened it up for the kids. Otherwise
nothing has changed much from before – only the hordes of Chinese tourists, and their inconsiderate behavior (littering, pushing, being loud, etc.), has increased.

On the way back into the city we stopped by the Beijing Olympics Stadium – our son really wanted to visit it. Unlike other former Olympics stadiums which may have been left derelict, the Bird’s Nest (as it is called) is as glorious as ever, especially at night with the lights on – it has a truly futuristic feeling. That Beijing will be the first city in the world to host both the summer and winter Olympics maybe has something to do
with the fact that the stadium and the Olympic village next to it have been kept in pristine condition.

The third day in Beijing was devoted to the Summer Palace, which is more like a massive garden and where the emperors spent their…summers. There, you would still see impressive buildings and pagodas but one should visit with the idea of immersing in their splendor and just relaxing and letting time pass by. In the evening, we visited Tiananmen Square and Mao’s mausoleum. While the latter was lit up, ceremoniously guarded and
full of couples taking selfies in front of it, the former was left dark and was
off limits for tourists. This prompted some questions from my son about
postmortem fairness in history.

The next morning, we got on the fastest train in the world and headed to Shanghai…

Silk Road (7): Free-roaming camels and wild horses

09 Friday Nov 2018

Posted by in EM, Travel

≈ 1 Comment

Tags

,

A note for clarity:

I set up this blog as a diary for my thoughts on the financial markets about a year ago. As we embarked on our Silk Road journey, my son wanted to share his travel experiences and I allowed him to use beyondoverton.com.

So now, you may have noticed that there are two entries per each country we have visited: my perspective (beyondoverton) and his (g88kboy). Additionally, because of the lack of reliable internet connections in most countries and our (Georgia and I, not necessarily the kids) desire to experience the real life as much as possible, our country posts come with delay. For example, I am about to post on Kazakhstan but we have been in China for almost a month already.

Connectivity being the issue has also meant that some posts have appeared in strange writing style – I don’t know why – could be because we upload from our mobile phones. It is for this reason that there are very few photos, in general. We have thousands, but uploading photos takes forever.

I have been also posting general footnotes on the journey, from time to time, with the latest being on China. That may increase the confusion as the timeline now, with this Kazakhstan post, seems to have been ‘broken’. A proper post on China will come soon!)

——————————————————————————–

We entered Kazakhstan twice. The first time when we crossed the Caspian Sea from Azerbaijan, and the second time, after Uzbekistan. The fact that we do not need visa to enter helped substantially in organizing our trip that way (all the visas we had to get so far for the other countries have been single entry only).

The two entries were also totally different experiences. During the first, we literally got taken for a ride by a local, whom we met on the boat from Baku. During the second, we met some of the nicest people (thanks to a good friend of mine: Nurik, if you are reading – a whole lot of gratitude) who not only showed us Almaty from a local point of view but also helped us cross the border into China!

We did neither know how to get from the port of entry on the Caspian Sea to the nearest town, Atyrau, nor really how to go to the border of Uzbekistan from there (about 6h drive). We thought we were in luck when one of the drivers on the boat from Azerbaijan, Mohammed, offered to take us to Beyneu, one hour away from the border. He had been to Georgia where he had bought a bus and was driving it back to his home in Aktau.

By the time we managed to get through passport control, and after waiting for a few hours for Mohammed to pass through customs with his bus, it had already become 10pm. I had checked that there was a train from Beyneu to Nukus, Uzbekistan at 4 am, so I thought, “Perfect timing”.

The bus driver had already agreed to take an American solo traveller, Michael, and a few of the locals along. At the last barrier before exiting the border area, the officers, for some reason, did not let us through. Mohammed turned around and asked me if he could borrow $30 (he said he had no cash) equivalent in Tenge, the local currency, because he had forgotten to pay for some document. It was lucky that I had exchanged that much money as, normally, exchange rates at borders are the worst.

It turned out, that he did not have the license to drive this bus (I have no idea how he had driven it so far!). I don’t know what the money I gave him was for, or how they let us through but now we needed to find someone else to drive the bus once in Atyrau, which meant that we could not go to Beyneu immediately.

We picked up more locals on the way, one of whom was kind enough to direct us as there did not seem to be a proper road for probably something like 10-15 km.

A small diversion here. This was a brand new port, which had opened literally two weeks ago. The facilities were excellent. Nothing compared to what they were in Azerbaijan and more like any modern European port of entry.

We stopped at a petrol station and the driver asked each of the locals to contribute some money for him to fill up the tank. That’s when I started to get suspicious; but still, he was a devout Muslim – he wouldn’t be a cheat and a liar, would he?

We were in Atyrau by midnight. We stopped at a parking lot just outside of town where all the locals disembarked and we waited for two people, one of whom was the new driver, the other, a friend of Mohammed. There was a new problem: they needed to arrange insurance, and, of course, that could not be done in the middle of the night. So, we needed to find a place to sleep…and somewhere to exchange money to pay for it.

Mohammed’s friend managed to arrange a flat for $40 for the night for all of us (including Michael) and I got in his car with him to find some Tenge and pick up the keys. (Everyone else stayed in that parking lot to wait for us).

When I look at this whole experience in hindsight, it seems surreal. I had no idea who these people were, we had just arrived in a foreign country in the middle of the night, I had left my family on a deserted parking lot and embarked on a trip across town with a stranger looking for a flat to sleep in and a place where to exchange money!

This guy was huge, a former Kazakhstan bench weight lifting champion…and he turned out to be super nice. If I had any fears, they quickly disappeared once I got talking to him in the car (by the way, unlike the other former Soviet Republics we passed through, Kazakh people not only speak perfect Russian but are also happy to).

He obviously knew his way around town. We stopped first in a secluded alley, where the ‘exchange bureau’ was an iron door with a small opening in the middle where you handed your dollars and hoped you would get some Tenge back. Then we drove to a really dilapidated block of old Soviet-style flats where a lady handed us the keys (she insisted on keeping my passport for ‘deposit’ but eventually settled for 2,000 Tenge – about $5).

The bizarre did not finish there. We picked up the family and Michael from the parking lot and drove to a brand new, very modern, but half-built ‘skyscraper’ on the Caspian Sea waterfront, where, I think, no flats were inhabited. The fact that there was a guard at the door who looked at us worryingly and warned he would call the police confirmed my suspicion (he did not).

The following morning, we got on the bus again and we left for the border town. I began to wonder whether I would ever get our money back. It was not so much for the actual money but a question of trust. Moreover, we had run out of Tenge and I was still relying on the money we were owed.

At our first stop we needed to buy water and I asked Mohammed when he was planning to give us the money back. He laughed back at me and said something like, “You were not thinking you were getting a ride for free, were you!?” Of course we were! The bus was going empty in our direction anyhow, and he had never mentioned money. His reply was, “Sorry, I must have forgotten to tell you, I expect you to pay for taking you to Beyneu”.

The situation became hilarious when, half way, we stopped at another petrol station and he asked to ‘borrow’ more money under another pledge that he would give it back. We were shocked after our previous exchange. Did he really think that we would trust him again?

Eventually, we got dropped off at the Beyneu train station but with a sour taste in our mouth.

Incidentally, while this drama was going on in the bus, the scenery outside was a vast steppe (most of it, hundreds of meters below sea level) where camels and wild horses were roaming free.  The other thing I noticed was, once past the Caspian Sea, people start to look much more Asian. In any of the countries so far on our trip, I could have possibly passed as a local. No such chance here.

We arrived in Almaty on the train from Tashkent. Almaty was really special: the unusually cold (below freezing, snowing) weather was contrasted with the amazing warmth of the people we met there. Nurik, my friend from University, who is also originally from Almaty but lives in London, put us in touch with his friends, Max and Daniar.

Max waited for us at the Almatyi train station, helped us to exchange money and get a SIM card and eventually took us to our rented flat. He was pretty much ‘on call’ all the time we were there with suggestions what to do and where to eat. And of course he organized our trip to the Chinese border.

Daniar took us for lunch where we tried some Kazakh delicatessen, among which camel and horse milk. Afterwards, he showed us Medeu, the most popular ski resort in Central Asia, just half an hour drive from Central Almaty.

Otherwise, the weather was totally ‘uncooperative’: miserably cold. We had planned our trip with the idea to avoid the coming winter in Central Asia/China, both as it is less pleasant to travel from place to place, backpackers’ style, when it is cold, and for practical reasons (fewer things to carry).

Georgia and my son had already bought winter jackets in Uzbekistan, and now literally the first thing we did in Almaty was buy hats and gloves in a mall. Then we went to the ‘Green Bazaar’ and bought these special waterproof ‘socks’ which go on top of the normal socks (we brought only one pair of shoes with us on this journey, the special Vivo Bare Foot, which had served us extraordinarily well so far, but were no match for the slush and snow in Almaty). And then we bought camel-hair and bamboo socks to keep warm. Finally, we still wore pretty much every single piece of clothing we had brought with us – this is how big the shock to the system was the cold we encountered in Almaty!

The upside of the bad weather was that we spent some time in Almaty wonderful cafes (I was very happy that I was finally able to drink some proper coffee!), restaurants (we had amazing Korean – it turns out that Almaty has a large Korean diaspora stretching all the way to the 1930s – the first mass transfer of an entire nationality!) and, of course, Bania Arasan (the Arasan Baths). This latter was heaven for Georgia and my son; I and my daughter, on the other hand, were just fine.

Arasan Baths were finished only in 1982 and are a typical example of Soviet modernist architecture. Rumor is that they were built to compete with the oriental baths in Tashkent (we did not see the latter because they were demolished a few years ago). Inside, the baths are not only really exquisite – a blend of oriental and modernist style architecture and materials; but they are also quite practical – everything was designed with a specific task in mind. Men and women bathe separately but, apparently, the two sides are exactly symmetrical. The choices are Russian Bania, Finnish sauna and Turkish steam room with the temperature in each decreasing in that order (if you are a first timer, like me, you would not
be able to stay more than a minute in the Russian Bania – it is that hot!).

We had chosen the rental flat right next to both the Arasan Baths and the Panfilovets’ Park the other must-see attraction in Almaty. The park is named and dedicated to the 28 soldiers of an Almaty infantry unit who died fighting the Nazis outside Moscow. We had to visit it despite the extreme cold. It was definitely worth it as the memorial is really magnificent.

On our last day we left Almaty very early in the morning for our drive to the Chinese border. Max came to pick us up from the flat (he gave us a few of the city’s famous apples for the road!) and then one of his drivers took us to the border.

The scenery was very much as I remembered it on our first encounter
with Kazakhstan in the east: steppes with wild horses (did not see camels;
don’t know if it was because it was so cold).

The difference was that this time the land was covered with snow, and with the majestic Tien-Shan mountains in the distance, it looked like a scene from one of those Russian ‘skazkis’ (stories) I had read as a child.

The border! Again! It all started well. We got dropped off where the car could go no further, picked up by one of Max’s people and taken, like VIPs, to the Kazakh border control. The appearance of a family on a deserted border crossing so far had caused some commotion and excitement. Here, though, it caused also some suspicion.

That was probably caused by my son mentioning he was from Italy while handing his British passport to the border officer, and my Eastern European name (and looks). Not only, it took the border officers an usually long time to process our documents (especially the kids’), but also, after passing through, we were separately, and casually, asked few questions (to the kids, what is the name of their mother; to Georgia, what is her name and to confirm her husband was from Ukraine!?!). We couldn’t
figure out if it was pure curious chit-chat from a group of bored officers or
digging deeper into our identities, but we thought it amusing.

The actual problem was what happened after we finally cleared the Kazakh border control. We started walking towards the Chinese side, when we were stopped by a screaming loudspeaker and asked to return back: apparently, you are not allowed to simply walk in no man’s land to the Chinese border – you have to be ‘transported’ there.

The issue was that the only transportation is a public bus, that not only arrives from time to time (no one knows when) but you need Tenge to pay for it (the same rate as if you had picked it up from the departure point), and we had not kept any.

We found ourselves in a bind. What do we do? Do we take our chances and wait for the bus? What if it is full? Would the driver take dollars instead of Tenge? Do we go back in Kazakhstan and attempt to board that bus at its starting point?

We decided to wait. Eventually, the Kazakh border officers warmed up and we started talking (I think they were bored – no one passed through the three hours we waited for that bus!). One of them promised he would talk to the driver and make sure he would take us on board, and for free! It was indeed a relief when the bus eventually arrived with enough spaces for us to board and cross into China. However, not before waiting for an hour, in the bus, while the Chinese border was closed for lunch break!

Silk Road Footnote

05 Monday Nov 2018

Posted by in EM, Travel

≈ Leave a comment

Tags

,

(Bull on the Bund, Shanghai)
We’ve been in China for less than a month as part of our Silk Road journey by land, a time, highly inadequate to make any strong conclusions. Yet, within that time, we’ve crossed the full country west to east, taken only public transport, stayed and dined in ‘everyday’ hotels and restaurants (a lot of street food as well!). All this gave us a chance to engage with locals on a completely different level than by only visiting the financial sector in Shanghai or government officials in Beijing (and staying in 5-star hotels – the way I used to do it as a professional investor). All this is obviously anecdotal ‘evidence’ but what struck me is:

1) the service sector is absolutely booming

2) prices are generally on the same level as in Europe/US

3) the locals can afford them

I consider myself a practical economist (UPenn/Wharton but having acquired 90% of my ‘economics’ from the markets and from tons of reading), so I am not making any claims, but it is actually possible, despite misgivings in the West, that China may indeed be growing at the official rate they have been reporting.

We, ourselves, in the West, are grappling with the accounting of an increasingly digitized service economy. Well, the size of Chinese e-commerce is multiple times that of the US, which means a lot more data. Moreover, because of the structure of society (centralization) they have managed to gather and analyze that data, and perhaps, make better conclusion than we could possibly make.

So, it is possible that we are indeed looking at Chinese growth too pessimistically, which does not negate the fact that all this may indeed be built upon a credit bubble. That would be hardly a surprise given that US growth has been built on a huge private credit bubble since the days of financialization in the early 1980s. Indeed, the locals we spoke to, think there are currently three big bubbles in the world: US stocks, Japanese bonds and Chinese real estate.

My point is that China could be shifting to a consumer-based society much faster than we anticipated and thus is also becoming much less dependent on exports and foreign growth – China does not need to rely on the rest of the world that much anymore. That was more than obvious on our travels in the country: foreign tourists, at best, are tolerated – the local Chinese tourist industry is very well developed and is flourishing. This is a big change from 10 years ago, for example, during which living standards have more than doubled.

It is amazing, in fact, the magnitude of Chinese middle class growth. When combined with the digitalization of society, totally embraced by the government, and the Great Leap Forward may finally happen.

(*Overtake England in 15 years”, 1958, Shanghai Propaganda Poster Art Centre)

The fact that some of these trends are developing much slower in the West due to a lot of private legacy interests, which stand in the way, and governments which imagine they are running out of money, increases the risk that this latest trade ‘war’ would prove to be a spectacular own goal.

Silk Road (6): Chevrolet Land

03 Saturday Nov 2018

Posted by in EM, Travel, Uncategorized

≈ 2 Comments

I know probably you would not believe me, having also said that every second car in Georgia is a Toyota Prius, but in Uzbekistan, pretty much every new car is a Chevrolet. Ok, I looked it up: thanks to a joint venture between GM and the government, apparently 95% of the new cars in Uzbekistan are Chevrolets.

Because of Uzbekistan’s vast resources of gas (and no oil), majority of those cars are adjusted for methane and propane, which are half the
price of oil. It was strange the first time we took a long-distance taxi and it
had to refill: the driver stopped about 200m away from the gas station and
asked us to get out of the car for safety.

I was really looking forward to visiting Uzbekistan. The country was a major destination along the Silk Road and I had heard so much about the magic of Samarkand already in my school days in Bulgaria. I was also very curious to see a country which was literally locked up for so many years after the breakdown of the Soviet Union: Uzbekistan’s borders were pretty much shut down until 2005 – during and until the end of Islam Karimov’s reign, the first president after gaining independence.

In fact, developing deep and meaningful international relations are still in their early stages. For example, the tourist visa regime was only recently simplified, and only a couple of months before our visit, Uzbekistan finally introduced e-visas. But also, because the country was closed off for the majority of the world for so long, it actually learned to produce a lot of goods locally. Ironically, the joint venture with GM was both an example
of this (locally produced cars) and an exception (foreign joint venture).

One could say that we entered Uzbekistan through the “back door”, from Beyneu, Kazakhstan. In fact, Uzbekistan is one of only two double land-locked countries in the world – these are countries which border land-locked countries themselves – yet another curious feature which made me
eager to visit it..

“Back door” is also in reference to the way tourists travel when they visit the country: they normally fly into Tashkent, go to Samarkand, and then Bukhara. Some of the more adventurous may go to Khiva as well. And
then back. We did it the other way around: Khiva-Bukhara-Samarkand-Tashkent.

We encountered a peculiarity about Uzbek culture already in the
border town there: vodka. When it comes to liquor, restaurants seem to offer a large variety of vodka, and pretty much nothing else (and people do drink their vodka – and it shows!). I seldom saw beer, and when I ordered it, it was not particularly good.

What is surprising, though, is the lack of wine. Uzbekistan has different varieties of amazingly sweet grapes but, as far as I know, not much of a choice when it comes to wine. We did try a bottle of wine in Nukus,
the only one on the menu; it was OK, but it turned out it was sweet (what a
surprise!).

But while we may have gone ‘against the tourist traffic’, so to say, we definitely went with the local traffic. The train left Beyneu,
the last stop before the Uzbek border at 4am. We had ‘camped out’ at the train station for the night which was full of people; in fact, at some point one could barely even stand there. There were traders selling all kinds of stuff outside along the railway line. It was incredibly busy!

The kids by now were used to such an experience and promptly fell asleep on the chairs, their heads resting on their knapsacks. As our trip has progressed, it is actually interesting to see how they finally started to grasp the concept of different kinds of comfort. For example, before
this trip, they were used to staying in 4 and 5 star hotels where their concern would normally be if the facilities include a swimming pool. Now they worry not only about the availability of Wi-Fi but sometimes, as in the case of Beyneu, also of a bed!

Around 2 am, a kind officer in the train station, with whom I struck a conversation about football, informed us that we could actually board the train. What was our surprise when we found out that we did not have any assigned seats, it was ‘first come, first serve’ kind of service, and people had already taken any seats where one could lie down! Eventually we managed to find two bench-seats for the kids.

As usual by now when crossing land borders, majority of travellers were ‘traders’: we were asked several times whether we could take some of their stuff in our bags. Overall, however, people were very nice and we
were simply treated as a curiosity. The border crossing was fast and
straightforward. The customs officer did ask us though whether we were bringing any history books!

We arrived in Nukus after 17 hours, travelling through mostly desert-like terrain. There, at the train station, trying to figure out a way to get to a hotel (we had no booking) I encountered another peculiar feature of Uzbekistan culture: they don’t seem to like to negotiate. Having travelled through all the other countries, but especially Turkey and Iran, where negotiating was part of the process, I found this strange. The taxi drivers in Nukus, for example, had very strict rules, one could say, the equivalent of taxis in the West with meter machines: 5,000 Soum (that’s the local currency) for the first 3km and 500 for each after. They would simply
zero out their odometers on every ride.

Even in the bazaars, Uzbek people did not seem to engage in negotiations. They were a bit more flexible there, but they would almost get offended if it went for too long and eventually refuse to sell you the product at any price if “pushed”. I don’t know if this is a specific Uzbek
characteristic or it is a vestige of the Soviet system but I had to respect that this is the way it is.

Our first planned stop was Khiva, a 3h drive from Nukus. The day we drove to Khiva, the temperature dropped from almost 30C, from the day before, to half that. We did not expect such a big change in weather that
soon, and definitely did not welcome it!

Khiva’s old town is surrounded by a wall, inside which old residential houses stand next to centuries old mosques and madrases. Both Uzbekistan’s history and culture are interlinked with those of Iran (and, later, Turkey), so the structure of the mosques is somewhat similar. Yet, unlike Iran, Uzbekistan is famous for its madrases, Muslim religious schools. Samarkand’s Registan, for example is composed of three madrases (but there is one small mosque in one of them).  

Despite this, Uzbekistan did not strike me as a particularly religious country. We barely saw women wearing hijabs (actually they were predominant only in Tashkent’s old town). We even had pork in a restaurant in Nukus (the proprietor was Korean) and in a cafe in Tashkent.

As we advanced more eastwards, the arid land gave way to some green vegetation, orchards and grapes. Along the roads, there were people
selling fruits and vegetables at almost any time of the day and (probably)
night. What was amazing to see was the melons: apparently Uzbekistan has the biggest varieties of melons of any country in the world (and the ones we tried were exceptionally sweet – it is a shame they do not juice them like in Iran).

Uzbekistan has plenty of cotton fields. As we were in the country right at the time of harvesting it, we could see people picking up the cotton and piling up the bags in massive containers along the road. We were told that students had to help with the harvest as well (i.e. no school for a month!). I remembered with fondness that we had to do the same in Bulgaria when I was a student there in the 1980s.

Unfortunately, the weather refused to ‘cooperate’ and it got progressively colder. So much, that we had to buy my son a winter jacket in the local market in Bukhara (he had lost his warm jacket somewhere along the
Silk Road before!). We were also forced to wear pretty much all our layers just to keep warm. Yet, that did not seem to help Georgia who fell ill and had to stay one full day in bed! The next day, while feeling better and able to walk around the streets, she also bought something to keep her warmer: a traditional long Uzbek coat. She looked different in it, and enjoyed the curious (from some, the older ones, obviously approving, from the others, the younger generation, amusing) gazes of the locals as we passed them by.

Another reason I wanted to visit Samarkand was Timur the Great, the legendary local leader I had read about as a kid. He created an empire which spanned a vast area, going deep into Persia and all the way to Delhi. However his reign was a one-off, i.e. there were no successors who could maintain his expansions. Timur was peculiar in a sense that he was illiterate himself, but he believed in the power of knowledge and appreciated the beauty of art. Legend has it that when he first ransacked Samarkand ,he killed the majority of the population but he spared the lives of architects, teachers and generally, people of knowledge. Then, under his guidance, Samarkand was rebuilt with the focus exclusively on madrases and other places of knowledge (Ulug Beg, the famous astronomer lived approximately at the same time).

Our last stop in Uzbekistan was its capital, Tashkent. I did not expect much of Tashkent, especially after visiting all these other places before that. Still, I was looking forward to being there because a friend of mine from both university and Morgan Stanley, whom I had not seen for decades, lives there. Unfortunately, he surprisingly had to go to New York the same week we turned up there. It was a shame, not only because I was looking forward to reconnect with him but also because speaking to a local, who I knew previously,would have enriched massively our view of Uzbekistan. As it was, Uzbekistan, after Iran, was a bit of an anticlimax.

However, we managed to get the best of our visit nevertheless. In fact, I enjoyed Tashkent, if not for anything else, for the blast from my ‘Soviet’ past that it provided, more than any other ex-Soviet capital I had ever been to.

So, a lot of things reminded me of how it used to be in Bulgaria in the 1980s: the monuments, the old block of apartments, the local market (where people would still offer to record music for you!), the circus. Even the main department store in the town where I went to high school was called ‘Tashkent’. We took the metro a lot (by the way, there was no metro in Bulgaria back in the ’80s). Some of the metro stations had very interesting decorations, the way I remember the Moscow metro when I visited it in the late 1980s.

The one thing we struggled with in Tashkent was knowing which restaurant was worth going to. In fact, that is one of the things we missed the most on our travels – after eating ‘street food’ most of the time, we were craving some variety…some
vegetables. Luckily, our next stop, Almati, would offer plenty of it.

Silk Road (5): Border bothers

24 Wednesday Oct 2018

Posted by in EM, Travel

≈ 1 Comment

Tags

Every national border marks the place where two gangs of bandits got too exhausted to kill each other anymore and signed a treaty.

~Robert Anton Wilson

 

Borders are a complicated matter. In Europe, thanks to the EU, we don’t even notice them now, but I remember the days, pre-EU, when I had
to get visas every single time I wanted to travel abroad on my Bulgarian
passport. Still, it’s interesting to think that when it comes to passports,
they are a relatively recent phenomenon, having been introduced only in the early 20th century.

I had already noticed the Azerbaijan border upon entering Armenia from Georgia because it is a stone’s throw away from there. We could see the abandoned houses along the road and on the hills around us on the Armenian side: the Nagorno – Karabakh conflict continues to be a big issue for these two countries. On leaving Armenia, I was specifically asked if I would be coming from Iran back through Armenia or Azerbaijan. On entering Azerbaijan, we were summoned and questioned (in French, the official either did not speak or refused to speak Russian) why we had visited Armenia.

The bus trip Tehran – Baku took 22 hours, of which the majority were spent either at the border, waiting for customs inspection, or at arbitrary and frequent stops for lunch, breakfast, dinner, tea etc. The 70% or so devaluation of the Iranian currency had created a brisk trade across the border: Iranian consumer goods had become incredibly cheap compared to Azeri ones and some people naturally took advantage of this. However, Azeri customs officials were not willing to turn a blind eye. This caused massive arguments about what could pass the border (can you imagine arguing with British customs about what you are allowed to bring in the country!?) which meant it took ten hours for just our bus to go through.

The town of Astara bridges the border there. This, plus the fact that there is a beach on the Azerbaijan side, reminded me a bit of the Turkey-Georgia border at Sarp – only that instead of the Black Sea there is
the Caspian Sea, and Batumi’s equivalent, Baku, is some 300km away (instead of 10km away in the former). There was only one other thing that brought memories from this other previous border crossing – it was raining throughout; everything else about it was very different.

To start with, the border was deserted: not a single car passed through while we waited. A few trucks, though, did. There is no passenger waiting area at all. Just a warehouse where both passengers and buses are checked. Once through (with your bags) one has to wait outside for the bus to be inspected. I had never seen a close border control inspection of a vehicle before: they literally took the bus apart, then they had a dog sniff
out for drugs. The kids found this quite amusing.

Once we made it into Azerbaijan, I was happy I had already exchanged some money in a ramshackle shop on the Iranian side, even though the
rate was ridiculous: there are no exchange bureaus on the Azeri side.

There was a lot of drama in the bus after we passed the border on the way to Baku: some women were crying, some were shouting non-stop.
I think some of their goods were confiscated and on the others they probably had to pay a fine. Still, the bus kept stopping at random places along the road where local cars would wait and money and goods would change hands.

We had exchanged enough money at the border to be able to
take the metro in Baku to our hotel. We were pleasantly surprised to see that it was fairly easy to navigate (signs in Azeri, Russian and English).
Unfortunately, though, I had forgotten to download the offline map of our
hotel, so we had no clue where it was. Luckily, the hospitality and
helpfulness, which we had become so used to in Iran in the past two weeks, seemed to extend in Baku as well.

Literally everyone wanted to help us: the ticket salesman,
the police officer, random people would just stop and take out their phone to try to figure out the location of our hotel. Eventually, a young man, speaking fluent French (very unusual, we were told, yet this was the second time it happened in Azerbaijan in the course of a few hours!), decided to get off at our tube stop and walked us to the hotel.

It was ‘difficult’ to get back to reality otherwise: the cost of things were back to what one would get in Europe. Baku seemed the most expensive city so far on our travels. On the positive side, we were happy to be
back in a culture where we could enjoy a very nice glass of local red wine on our first dinner there.

On that note, even though Azerbaijan is a Muslim country, it is obvious they have adapted their religious beliefs to a Western model of modern society. People in Baku were extremely fashionable, well-groomed, and
good looking. Barely a single woman wore the hijab or conservative clothing. Once more, London comparisons come to mind, as those Muslim women clearly didn’t seem to think it is a religious requirement to cover! Men also seemed to care for their appearances to such an extent that I decided to get a haircut too.

The hotel where we stayed was serviced by a group of young people who, again, were eager to help. I don’t know if this is an Azeri custom, but they walked us to the restaurant for dinner, to the taxi stand, to the exchange bureau, and, yes, even to the barber shop. And these were not places around the corner, but a good 10-15 min. walk.

Baku is a weird mixture of modern Yerevan and old Tbilisi. It seems more compact than either though. We stayed in the old city which is still surrounded by a wall (cars need to pay extra to enter). This part of Baku
has been restored to such pristine conditions that it feels a bit of artificially old: you aren’t going to get the dusty, crumbling feeling of time having swept its hands through it.

This was in stark contrast with Iran. While even there, we eventually realized, many mosques and cultural artifacts had been restored, people
had somehow managed to preserve the feeling of history passing by. This was only enhanced by historical sights being everywhere. Iran is a bit like Italy in that sense: there is history on every corner. Baku also has beautiful
mosques, ancient palace, etc. but they pale in comparison with what we saw in Iran.

So, in Baku we just took it easy and simply enjoyed walking the streets. That’s how we stumbled upon the Flame Towers, symbolizing Azerbaijan’s rich deposits of natural gas and oil (later, on the way to the seaport, we also saw the constant blaze of fire coming from the mountains in
the distance where the deposits are).

We also saw an enormous KFC restaurant (my son told me that, apparently, it is the largest KFC in the world!). Actually, already in Iran a five-star hotel would proudly have one of its floors dedicated to a fast food restaurant. The imposing building, which hosted this KFC in Baku, then
clearly indicated that fast food is quite well regarded by the locals in Central Asia. Could it be that it is still a novelty and a connection to the
western world and culture which the young people in these countries strive to emulate?

On the way to the Flame Towers we saw a massive flag in the distance. We did not think much of it, having already seen the massive flags in
Turkey, but later on we found out that it was the second largest one in the
world. In fact, until 2010, when they raised the one in Dushanbe, Tajikistan, it was the largest. Azerbaijan, though claims other ‘firsts’. For example, it was, unofficially the first country to declare independence from the Soviet Union in March 1991. It is also considered the first democratic Islamic republic (saying that, they have had a father and son as presidents pretty much since independence, with the son now serving three terms, when officially two terms is the maximum – so, I don’t know how that works).

Of course, we also did the ‘obligatory” sightseeing: Maiden Tower, roamed the streets of the old city, visited the Palace. There was one thing on our minds though: how to cross the Caspian Sea.

We had initially planned to go north around the Caspian Sea because there are no passenger ferries across (and we were told it wasn’t worthy to get the expensive Turkmenistan visa). Talking to people and digging deeper into travel blogs, however, we found out that one could still cross the Caspian Sea as a passenger on a cargo ship. The only problem is that there are no schedules for those: they leave only when required by the specific type of cargo. Still, we decided to try that option.

This meant that we had to call every morning the Caspian Shipping Company to find out if there was a boat going to Kazakhstan that day.
We got lucky on our third day in Baku. We were told that the boat would leave at 10pm so, as the port is 70km south of Baku, and eager to be there in plenty of time to acquire tickets for the boat, we left the city at 2pm.

This was the start of, possibly, the longest 24h of my life! It made me wish I was a truck driver: at least they have a bed in the back of their cabin!

We arrived at around 3pm and bought the $70 (per person – it includes bed and meals) ticket with no problem. We found out, though, that the boat might “only dock at 10pm, which means you will embark around 2am, and the boat might eventually leave around 5am”. Ok, we can survive
that.

Wait a minute. This is not a passenger port, there is no passenger terminal! The facilities consisted of a bunch of containers which were transformed to be a “drivers’ waiting area”, a shop, a bank, the Caspian Shipping Company’s office, a police booth and the smelliest, most disgusting toilet I had ever seen in my life!

We can do this?! Yeah, right.

The sight of a family seemed to cause a lot of excitement among the police and the truck drivers – as one can imagine, this is predominantly a man’s world. The police kept double checking our passports and asked me several times if this was indeed my wife and these were really our kids!

We soon found out how the system works: you buy eggs, sausages and vegetables from the makeshift shop and get the guy who mans the waiting area to cook them for you (I made a mistake not to agree a price first for his services, and, of course, he tried to charge us restaurant prices!).

There was nothing to do there. No free Wi-Fi. The kids were reading and trying to do some schoolwork but overall it was a huge exercise of our patience and managing our expectations in the face of the uncertainty of when we would depart.

We ended ‘sleeping’ on rackety chairs all night. Around midnight there was some commotion but it turned out it was the boat to Turkmenistan that was leaving (after also several hours of delay). No one had any information about what was happening to our boat. Around 7am I went to the ‘office’ of the Caspian Shipping Company and knocked on the door. The same guy who sold us the tickets the day before appeared from behind and asked me angrily what was going on. I said, I simply wanted to know if our boat had even docked. He just snapped back something like, “I was sleeping, how would I know?!”

If only we had been given some information, instead of spending so much time waiting aimlessly at the port, we could have visited the mud volcanoes which were very close by. Because of the enormous reserves of oil and gas (before the discovery of oil in the Arabian Peninsula, Azerbaijan boasted the world’s largest deposits – the scenery outside Baku is dominated by oil wells), Azerbaijan apparently has almost half of the world’s mud volcanoes in existence!

Finally, one of the police guys took pity on us and showed us on his phone (using one of those apps) that our boat was just outside of the harbor waiting to dock as soon as a berth got freed up. Finally, some hope.

We eventually embarked at 3pm and the boat departed at 7pm
for the 22h crossing of the Caspian Sea.

Let me tell you a secret: there is nothing special about crossing the Caspian Sea. We got lucky true: the sea was flat as a pancake (and
there is nothing to see but… water there – no other boats either), the
weather was nice and sunny, the crew was friendly (they allowed Georgia and my daughter to use special quarters when they needed to), the food was decent, and, yes, the truck drivers were friendly. I am not sure whether we even saved time compared to if we went around through Russia. So, apart from just saying, “we did cross the Caspian Sea”, there is not much else to say about that.

Silk Road (4): We took a bus ride to Iran

12 Friday Oct 2018

Posted by in EM, Travel

≈ Leave a comment

Tags

I cursed the sky to open
I begged the clouds for rain
I prayed all night for water
For this burning in my veins
It was like my soul’s on fire
And I had to watch the flames
All my dreams went up in ashes
And my future blew away

Now the oil’s gone
And the money’s gone
All the jobs are gone
Still we’re hangin’ on

Down in dry county

~Bon Jovi

 

Something is happening in Iran and you know it by the way the currency moves…

I had done a lot of research for this Silk Road trip, started in early January to think of an itinerary. But not everything could be planned in advance. When it comes to Iran, nothing could be booked in advance.

As it turned out, this was quite fortuitous. First and foremost, the exchange rate moved in our favour: a month before we entered Iran the Rial lost ⅔ of its value. This was on top of the already quite good value of accommodation, transport etc. which existed there before.

The official money in Iran is Rial, but because of the enormous number of zeros (I constantly carried tens of millions of Rial in my pocket; a dinner for four would cost around 2 million), the locals have a made-up unit called Toman, which simply has one fewer zero. It was very, very confusing at first to get around that because it was not obvious whether the quotes were in Rials or Toman – not for the locals, of course, who were used to the prices of specific items and goods.

It was not easy to know where to exchange though as there is the unofficial exchange rate and the official one, which is about half that. And while we were there, the Rial depreciated by another 30%! And it’s not like a foreigner can just look up the exchange rate online for guidance (no Bloomberg app!). The first time I needed to exchange (at the Armenia-Iran border) I relied on a kind fellow bus passenger to educate me on the intricacies of the Iranian street exchange rate market, and more importantly, to give me the approximately “correct” level from an app on his phone.

In Tehran, we simply stumbled on one of the main exchange points: Ferdowsi Square. It reminded me a bit of “The Magurata” in Sofia, Bulgaria in the late days of communism/early days of capitalism. In terms of the way the crowd worked, though, it might have operated a bit closer to any open-cry exchanges in US in the good old days! This kind of market was though quite unsophisticated: a few blocks away from the square, there opened the possibility of a clear arb.

Second, self-organized trips are cheaper than going through a travel agent anywhere in the world but in Iran they are incredibly so. This is because in Iran it’s extremely difficult to self-organize a tour from abroad. Because of decades-long sanctions, the Iranian payment system is not linked to the rest of the world’s directly: one cannot use foreign-issued credit or debit cards in the country. Therefore, there are agencies outside of Iran which facilitate the booking of all tourist-related activities (for small items, like tickets for buses and tourist attractions, the premium, though, could be more than 100%, especially after the devaluation). The option is either to use them or to carry lots of cash and do it on the go once in the country.

Not knowing the exact date/time etc. we would be in the country, forced us to organise internal traveling ourselves, once on the spot. Incidentally, this saved us a lot of money. The downside of doing this was, though, that the hassle and uncertainty, which normally accompany such activity, were amplified by our inability to speak, understand and read a totally different language and writing. After a couple of days in the country, we realized we should at least learn the written numbers in Farsi (by the way, Farsi is just ‘Persian’ in Arabic – apparently the Arabs had difficulty pronouncing the ‘P’ sound). This was partially spurred by the fear of being too easily cheated!

People trying to take advantage of us being foreigners in Iran were, however, fewer than what we normally experienced in the other countries so far on our trip. Everyone is of course aware how much more foreigners can afford now compared to not only a month ago but also in general. However, I did not see any bitterness on their side. They just accept it as a way of life. As one businessman observed, “We are a country of sanctions and we have learned how to cope with them; there is nothing new with these new ones; but, yes, it is disappointing because we thought we were finally getting along.”

But let me backtrack a bit here: to get to Tehran, in the spirit of this trip, we took a bus ride from Yerevan! That was a long journey – more than 24 hours – with crossing the border in the middle of the night. However, the bus was rather comfortable (it even had a carpet in the middle lane) and, as with all long-range buses on this trip, one gets complimentary food and drinks.

The distance to the border is only around 400 km but it takes at least 10 hours to get to, as the road passes through some very tricky mountainous terrain along where, in the crevices on the sharper turns, we saw the remnants of a few cars. (If you have ever been to the ski resort Les Deux Alpes, imagine the 20 km stretch at the end, to the top, but multiply that by 20, constantly going up and down – that’s Yerevan to the Iranian border). On the positive side, the landscape is absolutely stunning!

I knew that there were daily buses from Yerevan to Tehran but I had no idea where exactly they left from and how much they cost. As it turned out, because they are operated by different companies, they all leave from different places and their cost varies. No easy way to find out this information either online or even through the hotel. Best is to go to a travel agency (of which there are many in Yerevan). There are obviously alternative ways to travel but they are much more expensive (the locals could take us only to the border for the price of our whole trip to Tehran, for example).

Our first impression of the Iranian people, from meeting some Iranians on our bus, coincided with what we had read and what other people told us: they were very friendly and curious to meet and help foreigners. That impression indeed stayed till the end of our journey in Iran. In fact, when we asked people if they are equally friendly to themselves as well, not just to foreigners, they told us that they are friendly to everyone who needs help, but foreigners, obviously, seem to need more help in Iran.

We spent the time on the bus talking with our newly-made friends about everything: from what to see in Iran, to education, history, cultures and even politics. In fact, the one thing Iranians really love is talking politics. They openly discuss current affairs (as one Iranian later pointed out to us, “I can assure you there are more Iranians who like America than Americans who like Iran”).

We intentionally avoided bringing in religion in any of our conversation not to stir sensitivities, however, it was clear that most of the people we met, while religious, did not necessarily agree with the extreme religious requirements in place. For example, throughout our stay, we were super careful not to break any laws or customs having heard how strict the authorities are: we made sure that our 15-year old daughter, who looks more like 10, had the hijab on all the time. But locals kept telling us not to worry, that young girls do not even need to wear a veil. In fact, while having a dinner in one of those open courtyards of their traditional houses in Isfahan, we noticed that even some of the local women had their hijab off, resting on their shoulders (a sight quite common especially in norther Tehran).

A similar attitude of resignation rather than active promotion of was adopted towards the issue of separation between the sexes. While, men and women cannot ride in the same subway carriage, cannot go together to the swimming pool, cannot hold hands or show any kind of affection in public, etc., on several occasions we saw locals disregarding such rules whenever they could get away with it (i.e. kissing and hugging in the street).

As tourists, the daily reality of a society which enforces the separation of sexes barely touched us anyway. We only got a small taste of it when it came to wanting to use the swimming pool as a family (which we couldn’t) or attending a mosque during a religious ceremony. Once, I waited patiently outside the Shah Mosque on Naqsh-e Jahan Square in Isfahan for a long time with my son and a crowd of other men while Georgia and my daughter were visiting inside during prayer time. A few of them struck a conversation with me, probably seeing my worried face and my glazing eyes for a view of my wife and daughter, hopefully, exiting the mosque. They were really surprised that I was worried and assured me the mosque was “the safest place one could possibly find”.

We stopped a few times along the road before we reached Iran – once because the cooling system of the bus stopped working, another time for lunch. We had prepared our own snacks but I had left about $3 worth of ADM and went to buy some ‘ayryan’ (yogurt mixed with water and some spices – it is the best thirst quencher). I struck a conversation with the owner, an Iranian, who was very curious to see an ‘European-looking’ family in this part of the world – only locals and probably a few really adventurous backpackers otherwise take the bus to Iran – tourists take the plane!

I bought some plain rice just so that the AMD does not go to ‘waste’. When he realized this was our last Armenian money he brought us some meat to go with the rice, water and tea! That was even though I kept telling him that I do not have any more AMD to pay for it: he was genuinely very generous! This was going to be one of our many encounters with the amazing Iranian hospitality.

We passed through several small towns before we reached the border. Inevitably, they looked very 1960-70s Soviet style but they were impressive because I had never seen old Soviet block of apartments perched on the rocks in the mountain.

Finally, we reached the border. Its crossing was surreal: we walked through into no-man’s land for almost 1 km. In total darkness. Otherwise, both Armenian and Iranian passport controls were swift and courteous. Once in Iran, however, we had to further wait for the bus to pass customs control – and that took hours!

Past the border we fell asleep only to be woken up a few hours later and ordered to get off the bus! I feared something bad happening but it was only a rest stop – I think the bus driver must get a commission from the ‘restaurant’ for every person who buys something otherwise I do not get it why we had to leave the bus (the kids were very unhappy). Eventually, most people just bought some tea, only the bus drivers entered the restaurant.

I woke up with the first rays of sunlight eager to lay my eyes for the first time on this place I heard and read so much about! Iran is mostly a desert sprayed with some rocky mountains and an oasis here and there. The road system is, however, much better than either Georgia or Armenia: all the main highways even have toll booths! There are plenty of police speed checks, and in general, plenty of police presence. As a result, driving is very civilized, one could say, as good as any European highway (excluding the Mediterranean ones, of course!).

Arriving in Tehran in the early morning or, possibly, at any time of the day is a totally different matter. There are simply no traffic rules. At all! I have never seen anything like this anywhere. Perhaps Mumbai comes close but still not comparable. For cars constantly drive against traffic whenever, on the several-lanes avenues, there is a gap of oncoming traffic (or not!). Motorcycles commonly take to the pavements whenever traffic is slow or the road is one way and they need to go in the opposite direction (what is amazing is that they beep at the pedestrians to move away as if it is the pedestrians who have invaded their territory, not the other way around).

And traffic lights – what are those for? The weird thing is that there is police literally on every major crossing!

On our first day, we attempted to walk for half an hour to reach the Grand Bazaar from our hotel. This was the one and only time we did this given the state of the traffic, the inexorable heat and the awful pollution (on the positive side, this is when we stumbled across Ferdowsi Square and the local foreign exchange market). In the evening, the coolness of the air (Tehran is very close to the highest peak in the Middle East) and the lack of traffic make walking more manageable. We went then looking for a restaurant and as we stopped to ask one man for help, a small crowd gathered, all trying to help or just being curious. Foreign tourists do not randomly walk the streets of Tehran. In fact, we saw very, very few tourists in Tehran and that was in Golestan Palace.

That evening we met an Iranian who spoke fluent Italian who invited us to his brother’s apartment for dinner! The brother also spoke fluent Italian (and a few other languages). As we were not in the mood for spaghetti and in search of local flavours, they took us to this wonderful cafe where we had an amazing evening. This was yet another example of the famous Iranian hospitality.

Tehran was too much for me. Apart from the noise and havoc in the street, the Grand Bazaar was also a disappointment of sort. It is imposing and busy but not that different from the Grand Bazaar in Istanbul: in fact, anything not an artefact or authentic is made in Turkey or China. For a real experience of a different sort of Grand Bazaar, I recommend visiting Isfahan’s. Golestan Palace, though, is definitely worth a visit: our first encounter of traditional Iranian architecture and beautifully coloured tiles everywhere!

We were indeed told that to visit the real beauty of the country, one must really go in the mountains just north of the city for nature or head south towards the Persian Gulf for history, culture and nature combined! This is then what we did by heading to Kashan, about 3 hours bus ride from the South Terminal in Tehran. Kashan is this quiet and quirky little town full of traditional houses. A traditional house is one with an internal wide-open courtyard, a fountain in the middle, and with lots of little passages that lead to different size rooms. These houses are really stunning.

We made a point to stay in one despite our self-imposed backpackers’ budget. But Kashan is much cheaper than Tehran and, especially, our next stop, Isfahan, so it actually fitted us perfectly. I really liked Kashan. Among other things I especially enjoyed playing backgammon with the locals (though I lost). I do not understand why of all places recommended for tourists to must see in Iran, Kashan is the least favourite. Perhaps because it is a little village compared to all the others but is really charming. Plus, there is a lot to see in the surroundings.

It is for this reason that we decided to take a private car the following day, instead of the bus, to Isfahan. On the way, we visited the highest village in Iran, Abyaneh (2,222m above sea level). It is more than 2,500 years old and its houses, which are made of red mud and straw, have mostly survived the centuries. Abyaneh reminded me of many villages perched along the hills in the Italian countryside: it is that different from anything else in Iran. Even the locals wear very different clothes than anywhere else we visited.

While planning Iran, we did not factor in that our stay will coincide with the end of their most important religious holiday: you must have seen the men wearing black and green and beating themselves with branches on TV or online. For two days, everything closes in the country. That reality fully caught up with us while in Isfahan. That was unfortunate for us but it also gave us a chance to learn more about this tradition by visiting these ceremonies: the locals were very eager to explain things to us and they took lots of pictures! On the upside, during those two days there are stands all across the city which give away free food, tea, sweets and fruits (most restaurants are closed as well).

It was business as usual the morning we had scheduled to leave Isfahan, thus we managed to visit quickly the stunning central square, which is surrounded by two imposing mosques, a palace and the Grand Bazaar. A peculiar thing about Isfahan is the Armenian quarters, and particularly Venk Cathedral: one of the most exquisitely decorated churches I have ever seen. The surrounding area is also full of cute cafes where one could finally have a proper coffee (Iranians do not really drink coffee, and if they do, it is nescafé).

Once in Shiraz we visited many mosques, treated ourselves to some proper (European-style) restaurant food – after eating mostly ‘street food’ until then, this was a welcome diversion, though the bill looked astronomical (2 million, 800 thousand Rial), and organised our visit to Persepolis and Necropolis. Persepolis was great, but it is Necropolis that is magnificently different than any other ancient ruins I have ever seen, consisting of carved tombs in the middle of the mountain. In fact, Persepolis reminded me of the Baalbek Roman ruins in the Bekaa Valley in Lebanon.

I will actually remember Persepolis for almost choking on water. We had left Shiraz at 8:30 (rather than the suggested 8:00) in the morning. By 11am it was so hot and I was so thirsty, that eager to refresh, I gulped the water in a hurry and it went the wrong way
which is ironic, because one thing that will stay with me from Iran is how dry the country is. All the cities we stayed in had totally dry river beds. And there are so many fountains and water passages everywhere and they are all dry. I can only imagine how more beautiful Iran’s already well-preserved gardens and courtyards would look otherwise.

The changing of the climate globally is partially to blame: it is difficult to imagine that it would snow in the winter in Iran even 10 years ago (and the snow would actually keep) in the middle of the desert. The locals did not remember when it was that it properly rained last time. But this is also Iran’s own doing: the building of an intricate underground water system, eventually completely dried the on-the-ground natural water. This is not something necessarily recent. In fact, almost all cities we visited, but especially the ones in the south, had ancient underground water canals. They run deep and are still open – one could easily go down to the bottom.

In light of this water problem, I was surprised to find out that water is safe to drink almost everywhere we went – and there are public drinking fountains all over the cities we visited. Same holds for public toilets – they are free and they are everywhere (some of them are indeed “ancient”). In fact, the cities are kept in almost pristine condition: there is very little garbage on the street, plenty of bins and sanitary workers attending to the streets even late into the evening.

Another unexpected aspect of Iran for me was how digitalized commerce is. Credit/debit card payments are common everywhere, in the bazaars, on the street, and even in the most run-down taxis. In the major cities, there is a bank literally on every corner. I don’t know if they have the equivalent of Amazon but, they do have the equivalent of Uber called ‘Snap’. One could also easily book bus tickets online. Of course, we could not enter this digital world, but people were happy to book things online for us.

Our last stop before completing our Iran journey back to Tehran was Yazd, the centre of Zoroastrianism and the largest wind catcher in the world. On the way there, we saw a 4000 years old living organism, a cedar tree. In Yazd, I started to get restless about the exchange rate and its massive drop. Having worked in Emerging Markets for so many years, I feared this was not a good omen. My unease was also further exacerbated by the fact that since we had left Tehran it was a constant struggle to find a ‘proper’ place to exchange money (unless one was happy to pay the unrealistic rate at the hotels). The Grand Bazaars were the obvious places but even there, there was not one designated spot. In the Grand Bazaar in Tehran, for example, there is an area where all exchange matters are handled, similar to Ferdowsi Square. In Kashan we had to ask a few shops and finally we were led to a secluded place on the second floor of an otherwise mostly empty building. In Isfahan and Shiraz, it was randomly in the street, mostly around taxi stands. Funnily enough, it was in Yazd that there were several official exchange shops on designated streets, however by then the exchange rate had moved so much that locals were getting so concerned that we would be asked even by everyday workers to exchange.

When it comes to currencies, it is obvious Iranian people prefer EUR to USD now, probably as they see Europe as a viable emigration possibility. But whenever I struck conversation with business people about economic matters, it is interesting that they did not see any other alternative to the US Dollar. They think Europe has no choice but to eventually succumb to US pressure on sanctions: “one thing is for the government not to support these sanctions, but a private company would never take the risk and avoid them for fear of US business repercussions”.

They do not see Russia or China as alternatives either. In fact, they seem to look even more suspiciously at them as well: “Russia is simply a brute force and Russian tourists have a massive attitude of superiority”, while “China is a smart opportunist looking only after itself and Chinese tourists are simply clueless – you talk to them for 5 minutes while they just stare at you and eventually you realize they did not understand anything you said”. Moreover, “what are we going to do with all these RUB and CNY, we can’t buy anything we want from them, so we end up exchanging them back into USD and EUR to have access to global markets”.

This is a stark reminder to China which wants to make the CNY a global currency: they either have to offer something (goods and services) the rest of the world wants to buy with their currency in exchange or to offer safe store of capital, the way the US has done all these years. It seems China has played its goods for exports card already: global consumer markets are swamped with cheap Chinese goods. Which means they have to move up the value chain (which they are trying to, especially in technology) or free up the capital account and develop massively their financial services market. I will come to this after my visit to China.

Indeed, for a country under sanctions for so many years, there is a massive oversupply of goods in Iran (for now). The bazaars are full of consumer goods and there is plenty of food: fruits, vegetables, meat, bread, rice, teas
and rich sweet shops. The best thing was buying freshly baked bread straight from the oven – it is an amazing feeling which brought back memories from my childhood years in Bulgaria when we used to do the same.

And, again, the people are so generous – you can try anything in the shops and they are absolutely not offended if you decide not to buy. We walked one late evening back to the hotel in Yazd and passed by an oven with freshly baked bread. A man had just purchased half a dozen flat breads. Trying to balance them on his motorcycle, he saw us looking curiously inside wondering whether to go in and buy some bread. He just took one of his breads and insisted on giving it to us as a gift.

After Yazd we were once more back in Tehran, the only place where we could catch an international bus. This time we purposely stayed in the north to be able to see another aspect of the city. Indeed, if there is any social separation in Iran, it is most obvious in Tehran, which is clearly divided between the northern rich, residential and full of nature – a stroll in verdant, mountainous Durband is a must – and the southern poor part of the city. In fact, one could say that northern Tehran stands out among everything we saw inside the country.

I don’t know if this new round of sanctions would have a different effect on Iran’s economy than any of the previous ones. While there is still an abundance of some consumer goods, prices of water, rent and some other essentials and services have gone up. In fact, it is inevitable that the price of any good which has an imported component would be rising and with the Rial continuing to lose its value things could become really difficult.

Silk Road (3): Fast Car

30 Sunday Sep 2018

Posted by in EM, Travel

≈ Leave a comment

Tags

“You got a fast car

I got a plan to get us out of here

I been working at the convenience store

Managed to save just a little bit of money

Won’t have to drive too far

Just’ cross the border and into the city

You and I can both get jobs

And finally see what it means to be living.”

~Tracy Chapman

I am not sure if Armenians are ‘worse’ drivers than their Georgian neighbors or, actually, ‘more skilled’, considering the incredibly poor state of their transportation infrastructure. The road leading to the Georgian-Armenian border indeed is only one lane and once past it, it becomes one of the worst major roads I have been on so far. Avoiding the humongous holes and the incoming traffic was an incredible feat (our driver even proceeded to overtake an ambulance whose lights and siren were on). We were duly stopped by the police a few kilometers after for speeding.

The driver’s skill was even more incredible considering that a lot of the cars in Armenia are beyond ancient: I have never seen so many old Soviet cars since I lived in Bulgaria in the 1980s. I think literally all the trucks we saw were ‘Zils’ or ‘Kamaz’. Funnily enough though, the Armenians seem to take a lot of pride in their cars. Indeed, our driver – who, despite the fact that we picked up the minivan at the Tbilisi bus station, his lack of spoken Russian and his abruptness, was Armenian – got really upset when we ate some chakapuri (bread with cheese) and a few crumbles fell on the floor of the car. He did not calm down even after we cleaned up everything. All this even though the minivan was an ancient Mercedes with worn-off interior and holes in the plastic dashboard.

The area along the border here is very mountainous but the landscape changes from plush, almost tropical in Georgia to arid, almost desert-like in Armenia (similar to the one around Kars in Turkey). The border crossing itself was very straightforward: modern and absolutely no queuing at all. The kids and Georgia were sitting in the back, while I was squeezed in between a lady with more bags than she could carry and a poker player with just a ‘man’s bag’ in his hand. Still, she asked me, and not him, to help carry one of her bags across the border (was she a ‘trader’ of some sort?).

We arrived in Yerevan under a scorcher. If the driver likes you he will stop anywhere you ask him too. I had developed a connection with the poker player, who was in Tbilisi overnight to play as he had been banned from all casinos in Yerevan, so he helped us get to our hotel. We found tennis in common with him: Andre Agassi, who, according to him, is an Armenian born in Iran and living in US (the lady thought that even Serena Williams is of Armenian origin!).

The old town of Yerevan is like Chernokonevo, the village upon which my home town, Dimitrovgrad, was built after WW2 – a few shanty houses. But unlike Dimitrovgrad, Yerevan is an ancient city with rich history and culture. All the wars and earthquakes must have put a heavy toll on this city. Maybe, this is why there is massive amount of construction going on, much more than I saw in either Istanbul or Tbilisi, or, in fact, in any European city. To see ancient Armenian churches and castles one has to go in the surroundings of Yerevan and across the border in Turkey.

In fact, Yerevan is very modern: there are a lot of art installations and monuments all over the city. But most of the architecture is still Soviet style. Yerevan is also very vibrant. While we were there it was full of street musicians, there was even a live concert of a Russian band, and the singing fountains in Republic Square were on every evening.

Armenian food is somewhat similar to Georgian – just slightly different versions of the same dish. I did not see the khinkali equivalent in Armenia though. And, of course, Georgian wine is out of this world. But I found Armenian fruits sweeter, especially the apricots (I am really gutted I did not try the Georgian watermelon, though). The Georgians have this ‘churchuri’ made out of dried fruits and nuts held together by grape molasses; the typical Armenian equivalent is to take the whole dried fruit and fill it up with nuts – both are absolutely outstanding!

As I mentioned before, we are doing this trip the backpackers’ way, meaning we use as much public transportation as possible. Turkey was perfect in that sense – very easy. Georgia was ok – we used the metro. But while there is more Cyrillic on the signs along the road in Armenia (than in Georgia) Yerevan’s metro is very small and the signs are only in Armenian. Therefore, we walked till, under 34C, at some point it became impossible. So, we took a taxi back and forth to the Armenian Genocide Memorial – it cost us less than $2 equivalent each way and both drivers were very pleasant and polite (I could communicate in Russian).

Having spent some time now also in Armenia, combined with our experience in Georgia, made me reflect on our expectations regarding the service industry and how it affects our views of a country and its people. In Tbilisi, the restaurant waiter may indeed have been less attentive according to our standards, but we felt very welcomed when we were invited to the house of our friend’s friend and treated to tea, coffee and fruits. In Yerevan, even though the hotel’s clerk was clueless when asked basic tourist information and she clearly didn’t seem to think it was part of her job description to help, the doorman kindly helped us.

It made me question whether the level of service we expect is linked to our culture. In particular, I guess, I was surprised at my own Western bias, considering I grew up behind the Iron Curtain. It made me wonder what possible hope we have to teach our kids tolerance and understanding of other cultures by any other means than travelling through them

Silk Road (2): Could beautiful nature and ancient history create a false sense of entitlement?

29 Saturday Sep 2018

Posted by in EM, Travel

≈ Leave a comment

Tags

The first thing that struck me in Georgia was the Toyota Priuses. I think that literally every third car was a brand-new Prius. That was in stark contrast to almost all other cars which were very run-down Opels, Fords, BMWs, etc. You could still see the old Soviet Lada, Jiguli and Volga too.

We took the ‘marshrutka’ (minibus) from the border to the rented apartment in Batumi. Needless to say, the exchange rate at the border was much worse than anywhere else in town, so apart from exchanging our leftover TRY and having enough (50 EUR cents = 1.5 GEL per person) to pay for the ride into town, no more money was necessary. The marshrutka itself was a leap into my past – the early 1990s in Bulgaria – I think the vehicle was even older than that. Moreover, it boarded at least twice the allowed capacity and our Turkish driver on the other side of the border was an angel compared to this Georgian one.

The second thing that struck me was that pretty much everyone was reluctant to speak Russian, regardless of age. The military conflict with Russia had left a big impression of some resentment but mostly bewilderment (“What possibly could the Russians want from us?”). The caretaker of the apartment where we stayed however, brightened up when I told him I am originally Bulgarian and gave us a very nice bottle of local homemade red wine.

Batumi has an impressive beachside boulevard where we spent our day strolling about and riding on mini-scooters. The scooters had their own designated lane but at 20-25 km/h they could still pose danger to the pedestrians who walked nonchalantly in the area: I presume this was part of the Georgian driving experience anyway. Hiring the scooters ‘broke’ our daily entertainment budget but that was an offset from the transportation budget from the day before (the ‘marshrutka’) and the free ride to the train station later which our host was nice enough to offer.

Apart from the popularity which comes with its name from the old Soviet times and the casinos which I presume tourists flock to, I am not sure what else Batumi has to offer though (BTW, again, the bid-offer spread in some exchange bureaus is less than 1%). Yes, the skyline looks impressive and even the modern buildings have a very nice style, which actually blends well with some of the older architecture still visible across. But the beach itself is large rocks and no sand at all: Kobuleti, a half hour drive East, has a better beach.

The train to Tbilisi is very modern with free Wi-Fi and outlets for charging devices. It is not as fast as Istanbul-Ankara, though, as it takes one hour more to cover 100km less in total distance. But then the mountainous landscape does not allow it. The ride immediately after leaving Batumi train station runs for several kilometers literally along the beach where there are still the old Soviet style (very rundown) blocks of apartments alongside some impressive villas. If the mountains on the Turkish side of the border reminded me of Switzerland, this side of the border looked much more like Costa Rica – almost tropical. And while the Turkish side has much more order and the houses looked generally nicer, everything looked rundown in Georgia.

Tbilisi, however, also has a touch of Italy when it comes to its old city (and, of course, the wine): it is a quirk combination of art, imposing buildings, beautiful natural landscape and historical artifacts. It is a city for romance, full of balconies (on a visit to the city during the Cold War, M. Thatcher allegedly said, “Everywhere else they are building shelters, you are building balconies”) and night lights – the stroll to the Sulphur baths is a must. In hindsight, actually, we should have stayed longer in Tbilisi to enjoy its full splendor.

We were very lucky to meet up with a friend of a friend who spent the whole day showing us the city and its surroundings. She was amazing, such a nice and positive person. Most Georgian people in the service industry, however, looked rather miserable and even bitter somehow. I am not sure whether it was my Russian that made them so. That attitude, which sometimes merged into outright rudeness, obviously will not help business: most tourists are Russian. And knowledge of any foreign language is a plus, especially one which is spoken by hundreds of millions of people (Georgia’s population, on the other hand, is just around 4 million).

While in Turkey, I fully expected to be bargaining when engaging in an exchange as part of custom. In Georgia, the bargaining felt as if it was more about not being taken advantage of. Our host in Tbilisi, for example, offered to charge $280 (4 people) to take us to Yerevan (5 hours drive) and lied how much the ‘marshrutka’ would cost ($50 per person), when the actual price was not only $13 per person but there was plenty on offer as long as someone bothered to go to the taxi stand at the bus station.

In the local street flea market my daughter’s leaning to touch an object provoked an extreme reaction by the shopkeeper – she yelled so violently that passers-by stopped to see what happened. In one shop there was even a sign in English that said “Customer is not always right”!

I am only guessing here, but all this could be related to a sense of entitlement, also very common in my home country, Bulgaria. Small countries like these, which are lucky to have amazing nature, are full of ancient history and once had very sophisticated culture, but which were more recently easily conquered by other more populous, but less ‘ancient’ nations, do maybe tend to feel superior and to blame external forces for their issues. In that sense, Georgia is both an old and a very new country at the same time: having gained its independence from the Soviet Union only a few decades ago, it still lacks the proper institutional infrastructure and framework to really make decisions in its own interest. It is naĂŻve to think that having exited one ‘union’, joining another would automatically solve all problems.

Before passing a real judgement about the way a traveler is treated in Georgia, however, I feel we need to complete our journey and revisit, under the light of new experiences, this first opinion I formed.