Despite all this, Melekov was not that much of an exception as one might think. He was a producer, and like such in any country or any type of society, he demanded and received privileges. A country which developed H-bombs, Sputniks, and a gross national product of half a trillion dollars obviously had to have a good number of producers among the drab millions. Each of these was as jealous of his “rights” as any IBM vice president or Madison Avenue genius in the somewhat more reward-oriented environment of Manhattan. Naturally, both groups of executives also had to learn to live with the knowledge that every minute of the working day, the axe hung over their heads. In Russia, of course, by tradition this axe sometimes took on more than literary form.
To be sure, Melekov was not exactly the Horatio Alger type. He had inherited privilege and also the self-assurance that goes with it. As the son of a great Russian agronomist, he had not only been able to study at the Moscow University—not more than a mile away from where he now lived—but also had attended the London School of Economics in 1937 and 1938. His field had been money and banking.
Papa, who had made all this possible, had not survived beyond 1937. He made the mistake of zigging for corn instead of zagging for soy beans.
Igor, fortunately, was out of sight and mind in England at the time, and after completing his studies slipped quietly into a glorified clerical position in the London branch of the Moscow Narodny bank. He hung low, inching up the ladder for almost a decade. Then in 1949 he hit the jackpot. Scoffers among you may doubt this, but Igor invented the Eurodollar! Not all by himself, of course, but it was his staff paper, dated July 17, 1948, and duly initialled I.M./o.l., that provided the conceptual basis for a money and capital market which went from nothing to $65 billion within twenty years. The o.l. was the inevitable secretary, whose uncalled-for ambitions died with the birth of the Eurodollar. In fact, they died somewhat earlier, but Olga Ludidovna, today back in Smolensk, still must believe otherwise.
It happened like this. The Soviet Union, since the 1920s, had always conducted the majority of its foreign trade in U.S. dollars. Even in the darkest days of the cold war this did not change. As a result, the Soviet Union’s banking system—and especially the Foreign Trade Bank as well as its affiliates in London and Paris—were forced to maintain high quantities of dollars as lubrication for the system. As our young Igor noted, those dollar balances simply lay idle, as sinful a procedure as is imaginable in banking circles. There were, however, good reasons for this. For, under what everyone had assumed to be the immutable law of nature, dollars were only lent and borrowed in the United States, just as financial transactions in sterling were restricted to the United Kingdom, rubles to Russia, and so forth. For the Russians to lend dollars in the United States at that time would have been something less than prudent. In fact, this is probably no less true today. For according to the books, Russia is in hock to the States for umpteen billion dollars, for everything ranging from defaulted czarist railroad bonds to lend-lease debts from World War II. Sequestration, expropriation, outright theft loomed over every Russian dollar which might seek to make a capitalistic buck on Wall Street.
Cunning Igor’s solution was quite simple. Lend the dollars in Europe! The audacity of this thought—stated just that bluntly on page 64 of the July 17, 1948, memo—was not recognized for a full year.
After that, Igor Josef Melekov’s career was made. His father’s corn was forgotten; his years among the fleshpots of London were forgotten; and of course Olga was forgotten. In 1959 Melekov was recalled to Moscow and appointed deputy assistant manager of the Foreign Trade Bank of the Soviet Union. By 1968 the Eurodollar market had become the most dynamic money and capital market in the world. The Soviet Union had earned hundreds of millions of dollars in this market in the meantime. In that same year Igor became deputy chairman of the bank.
As deputy chairman of the Foreign Trade Bank of the Union of Soviet Socialist Republics, Melekov was a powerful man. He literally controlled all payments between Russia and the rest of the world. Either his signature or that of his boss (we’ll come to him later) appeared on all hard-currency borrowings or loans exceeding one million dollars entered into by Russia. In terms of sheer numbers, he made our friends Dr. Hofer, Sir Robert Winthrop, and even David Mason, look like managers of branches of a Montana savings and loan association. But, and there always seems to be a but, he was still only Number Two, and by the early 1970s it slowly became apparent to Melekov that he had squeezed the absolutely very last ounce of impetus out of his 1948 coup. Even highly original and immensely successful ideas have their inevitable life cycle. This truth was slowly facing Igor.
Of course in London, where Melekov had just completed his periodic check of the bank’s affairs in that money centre, this was not felt. There, the older the ideas, the better. What irked Melekov no end was that this was apparently becoming true at home—in so-called revolutionary Russia. Most of his colleagues were fully prepared to accept the Brezhnev rule of collective mediocrity. But by no means all of them. The latter wanted new action. Not a la Khrushchev, however. His clowning, primitiveness, inconsistency had almost nauseated Melekov at times. But still, the man had shown dash and initiative. He had been willing to experiment. He had shown guts; demonstrated willingness to take enormous risks in Cuba, in Cairo, and even at home in 1956. But he had lacked cool logic. Which brought to mind Melekov’s Number One at the Foreign Trade Bank. To list everything that that Georgian hack lacked would have exhausted even the Biblical (Old Testament) capacity for articulating human flaws.
“Good evening, sir. May I see your boarding pass please?”
Melekov duly ceased dwelling on any radical political thoughts as he entered the neutral territory of Swissair and handed his card to the rather dumpy, though well-scrubbed, stewardess. She showed him to the last row in the first-class section and pointed to the window seat on the left. He removed his topcoat and handed it to the girl. He pulled his copy of the Financial Times out of his briefcase, and settled back to wait for takeoff. The flight to Zurich would take one hour. Just about right. Melekov enjoyed flying but hated the boredom of long trips. Sixty minutes in the front end of a DC-9, mostly spent coping with a couple of cocktails and a decent meal, represented in his mind just about the optimum way of moving across Europe.
The Lombard column in the paper had Melekov’s full attention when the final person to board the plane, somewhat out of breath, took his seat directly in front of Melekov. Well, it almost had his full attention. Melekov had lived all his life in an atmosphere where constant surveillance of the people in his vicinity was a necessity for survival. To be sure, due to his age and geographical location, he had missed the very worst of the Stalinist purges. But things had been touch and go twice—in the mid-50s and again in 1964. He knew that he had reached a level of power where he was by definition vulnerable—to everything and everyone.