“Who are the takers?”
“We did about $500 million in both Zurich and London. We’re now working on Frankfurt and Paris.”
“What’s happening to the rates?”
“Well, we must be putting a lot of pressure on the forward dollar. But it’s holding damn well. We’re being matched immediately by takers every time.”
“Good. When does New York open?”
His man glanced at a large wall clock. It showed just a few minutes past three.
“Daylight saving time in the States is over now, so we’re back to ten hours difference. That would mean New York opens in three hours.”
“Right. Try to sell at least another billion in the United States. But mix it up. If necessary do the last part on the West Coast. But remember, keep exclusively to the forward market. Don’t touch spot. And keep the rates coming to me. I’ll be in the office until midnight.”
“One more item before you go. We made that transfer of $500 million to Zurich as you instructed. Now what should we tell them to do with it?”
“I’m handling that directly,” replied Melekov. “But I think you must be kept fully in the whole picture. We’re using it to buy gold bullion.”
“You mean that the Swiss government is actually selling gold?” was the response of his astonished trader.
“No. We’re going to get it in the free market.”
This time the only response was a low whistle.
Melekov added, “That, my friend, is for your ears only. Do we understand each other?”
The nod of agreement could not have been more emphatic. And the stride of Melekov as he left the foreign exchange trading room could not have been more confident. He was taking the biggest gamble of his entire career. But he was in his fifties and it was now or never. Such an opportunity would not come again.
Hans Klausen had not lunched at the Russaya. He had rushed to the German embassy minutes after Melekov had left. That was the only place from which he could hope to communicate with Düsseldorf free of a few dozen curious Russian ears.
The ambassador received him minutes after his arrival, and both of them were soon in the communications room in the basement of the building. They remained there until well past midnight. The future of the ambassador’s status in Moscow related very closely to the future of this pipeline deal. A sudden collapse of the negotiations—just hours before the signing—could set back his newly found rapport with the Soviets by years. He communicated this to Bonn in the strongest possible terms.
At one-fifteen in the morning, Moscow time, he had the answer. The transaction could be based on U.S. dollars. The German government would provide an airtight guarantee to Rhein-Ruhr covering the foreign exchange risk. The interest rate to be paid by the Russians would have to be increased by a token .25 percent, however. After all, prestige was always at stake.
Both Klausen and the ambassador were satisfied. They finished off the bottle of Steinhäger shortly after two. Klausen spent the night in one of the guest rooms at the embassy. He was too tired to move. And he needed to regain his strength for the closing of the contract later that day. Not that the signing would be particularly strenuous. But he knew his Russians. The celebration which would follow would last the entire night.
On this same evening, while the two Germans sat in the basement of the embassy, and while Melekov was directing the moves of his foreign exchange and gold people from his office in the Foreign Trade Bank of the Soviet Union, his boss—Chairman Stepanov—was dining at the Georgian restaurant on Gorky street with a friend. They had met at seven and after five courses, accompanied by much vodka and a few beers, they were now basking over the remnants, with cigars and a bottle of cold Crimean champagne.
The time had come to broach the subject.
“Josef,” said Stepanov, “tell me something. Did the committee discuss any change in our foreign exchange policy recently?”
“No. Not that I know of. I understand nothing about financial matters. You know that, Valentajn.”
“Of course. But was there no discussion about the dollar?”
“No. Of that I am sure.”
“I thought so.”
“What?”
“Roskin and especially that fellow Melekov are not only working behind my back but also behind the back of the committee. You’ve heard me talk of those two before.”
“Indeed I have.”
“Ambitious, ruthless, dangerous. Both of them. They are like twins in their thinking and in their history; educated for years outside of Russia; neither of them fired a shot, or even heard a shot, during the war. They consider men like you and me, Josef, to be Georgian peasants, people who must be removed from the system to make room for academic fancy-pants like themselves. That is exactly what they are trying to do now. I’m sure of it. If we let them get any further, neither you nor I will remain unscathed. It is an absolute outrage. We must do something.”
Stepanov was working himself up into quite a state. But in this restaurant no one noticed. As usual the atmosphere was boisterous. The alcohol was flowing faster and faster as the hour grew later.
“What have you got in mind, Valentajn?”
“I think that you and I—both of us—must approach the committee, immediately.”
“But do you really feel that it is that important?”
“There can be no doubt. A grave error is being committed.”
“Are you sure of your grounds?”
“Positive!”
“I will make the arrangements, Valentajn.”
“Many many thanks, Josef. You are a true friend.”
The orchestra, seated on the balcony against the background of a wildly colourful mural depicting the Alpine-like scenery of that corner of Russia so dear to the hearts of the majority of guests, struck up another tune with slightly off-key gusto. The two men decided that another bottle of champagne was in order, with just a touch of vodka on the side.
11
THE next morning in Zurich the banks started their foreign exchange operations as usual. On this Wednesday, business was brisk, as usual; rumours were flying, as usual. And the Swiss were making money, as usual, in what many people regard as the most difficult of financial markets. Foreign exchange comes natural to the Swiss, and for many years they have been exploiting this natural resource to the hilt.
The development of this unusual talent stems from that fact that almost every Swiss is somehow involved in foreign exchange transactions from a very early age. Living in a small country in the centre of Europe, no Swiss is ever more than a hundred miles from some border—that of France, Germany, Austria, or Italy—and the rates of exchange between the Swiss franc and those of these neighbouring countries are as familiar a fact as the price of gasoline is to the average American, or the cost of a pint of beer to a Welshman. In fact, many a Swiss will be able to quite readily tell you the price of gasoline in all of his neighbouring countries, expressed in terms of Swiss francs or even dollars if you like, since, with his built-in frugality, he will always calculate very carefully whether he should fill up his tank at home, or abroad, when he sets out on a Sunday drive across the border with his well-polished automobile. In other words, he goes through constant and sometimes complex foreign exchange calculations as a matter of course in his daily life. Take, for instance, a citizen of Basel. This second-largest city in Switzerland borders immediately upon both France and Germany. It is quite natural for a Bâlois to go shopping in Germany, just across the border, in the afternoon, seeking bargains in the supermarkets, and then go over to France for dinner in the evening, attracted especially by the price and quality of the wine. He does not go back and forth to the bank twice a day buying the required German marks or French francs. No, he just keeps their separate compartments in his billfold—one for each of the three currencies which are part of his everyday life.