he economic crisis that hit the world during the 1990s had a different impact on every nation around the globe. This economic crisis wasn’t caused by something specific as it is defined by many different events concerning the financial status of the world. The world was going through a major change from an economic perspective as the world powers started to balance after the Cold War.

Economic Crisis

It started with the United States and many other central European countries being hit very hard by this, especially with the most major recession seen in history due to the Gulf crisis pushing consumer confidence to an all-time low. The recession itself had many other factors, but it was just all happening at a really difficult time for America.

Then followed the banking crisis within the Scandinavia countries such as Finland and Sweden which at the time were known to have some of the strongest banks around the world due to their financial muscle supported by offshore accounts. Let’s not forget about Black Wednesday which tarnished UK’s financial power in 1992 by being forced to withdraw its pound sterling from the ERM (European Exchange Rate Mechanism).

Next was the Mexican economic crisis which was an inevitable event waiting to happen after the huge recession in the US which forced the United States government to devalue the peso against the dollar. As the main exporter and importer of Mexico was the US they got screwed really bad as most dollars present in Mexico were taken out overnight causing a capital flight.

Another major hit to this whole crisis was the 1997 Asian financial crisis that diminished the economies that have been built for centuries by countries such as Japan, South Korea, and China. Next in line and the most important to this article is the 1998 Russian financial crisis that occurred due to the Russian Central Bank devaluing the Russian ruble and defaulting on its debt.

This was a necessary move as Russia was having a hard time getting used to a democratic system since the fall of communism in 1991.

15 bottles of vodka per month

Due to this crisis, Russia had to make a lot of changes in order to keep its country from falling into a major recession which it still fell into despite all its efforts. One of the major changes was paying the teachers within Russia using vodka instead of money. Most teachers had a set salary of 15,000 rubles which was around $200 back in that time and today that would be around $430.

Some of you may be shocked by this small salary, but that was a decent salary back in those times, as I mentioned Russia was going through a rough time financially as it was from their shift in the political system and losing a lot of assets since the fall of the Soviet Union. Instead of the 15,000 rubles, teachers would receive 15 bottles of Russkaya Vodka (the staple of vodka in Russia during the 90s).

Bottle of Russkaya vodka just like the ones given as pay to teachers in 1998 (Source: The Whisky Exchange)

An article published in the Moscow Pullman Daily News from September 22 1998 mentions that all Teachers within central Russia will be receiving their monthly salaries in vodka because the government’s coffers are empty. The article also says that 8,000 teachers in the Altai Republic (Siberia)will be receiving 15 bottles of vodka as their salary whilst local leaders pressure the federal government to pay its debts.

The government promised teachers when this change happened that it would be something temporary that would last a few months and once the period was over they would be paid remuneration. The government promised to pay the equivalent of $2.5 million to all teachers in August of 1998, but no teacher received any money.

A question that I have seen raised many times around this topic is, why vodka? The use of food or other household items would have seemed better, but Russia was having a problem acquiring those as well. Vodka was what Russia had in abundance and this is why they gave vodka to teachers. On the other hand, vodka was consumed in vast amounts by most households.

I have seen some other sources mention that it was not only teachers but some other professions who during that period of time received the equivalent of their salary in vodka. By the start of 1999, the government managed to raise some funds in order to actually pay teachers with money instead of vodka. Something tells me that some of them preferred being paid in vodka simply because life wasn’t very colorful in Russia in that period of time.