Ukraine sees echoes of the 1990s as financial crisis bites

Kiev

A CRIPPLING financial crisis in Ukraine is turning the clock back to the 1990s, when people kept dollars in their socks rather than at banks and smuggled cars to sell them on the black market and avoid the tax man.

When the Soviet Union collapsed in 1991, leaving the command economy in tatters, many in the newly independent republics such as Ukraine were left to fend for themselves, using guile to seek out goods and services and navigate the new capitalist reality.

Some business leaders say those days are returning as Ukraine nears financial collapse, with the hryvnia currency plunging about 30 per cent against the dollar on Thursday after the central bank ditched its unofficial peg.

As the economy deteriorates and fighting rages between government forces and Russia-backed separatists in east Ukraine, banks are no longer lending, and selling imported goods makes little economic sense, said Oleh Nazarenko, director of the Ukrainian Association of Car Importers and Dealers. "We are returning to the 1990s, when drivers hid their dollars in their socks and bought cars in Germany, then drove them to Ukraine and sold them with cash changing hands on the street - with the state not getting a penny in taxes," he…