A PUNGENT ODOUR of dried fish and the cries of merchants fill the cavernous central market, which locals in this southern Russian city still lovingly refer to as “the old bazaar”. Commerce is in the blood here. “If a man doesn’t want to earn money, then what is he doing on this earth?” guffaws Galya, who hawks pork. Rows of sellers reflect a multicultural history: Armenians, Georgians, Greeks, and even Korean women peddling kimchi. Down the hill from the market, the river Don beckons; on the city’s left bank, barges with piles of grain await their departure for foreign shores. “The south is more alive,” says Inna, a fishmonger. “It’s like the fish: when she swims in clean water, her eyes sparkle.”
A city with roots as a trading hub, Rostov-on-Don has preserved its entrepreneurial spirit. “The Russian south is the model of a future Russia,” argues Sergei Smirnov, CEO of Center-Invest, the largest regional bank. “We don’t have oil, but we do have agriculture, tourism, transport and small business.” Although Russia’s GDP growth is slow at around 1.5% a year, the Rostov region is humming along at twice that pace, powered by booming farming, retooled manufacturing and an active citizenry. In Rostov-on-Don, the regional capital known simply as “Rostov” (or “Rostov Papa”, a name from its days as a criminal capital), “people bustle about and try to make things happen, which is a very big difference” from other similarly sized cities, says Natalia Zubarevich, an expert on Russia’s regions.
The combination of geography, tradition and mild weather makes Rostov among Russia’s most entrepreneurial cities. As Yuri Bogdanov, Center-Invest’s director of innovation, says: “Cities developed around these southern markets.” Even 70 years of Soviet life could not snuff out the instinct: when Mikhail Gorbachev legalised co-operatives as part of perestroika, Gloria Jeans, Russia’s first producer of blue jeans and one of its largest clothing firms to this day, opened in Rostov. In Rostov, 44% of the workforce is employed in small and medium-sized businesses, compared with a dismal 25% nationally.
The regional governor, Vasily Golubev, also has a business-friendly message. “We’re open for investors, including foreigners,” he declares, a statement that might seem discordant in an era of sanctions and with a war simmering just across the border in eastern Ukraine. It helps that Rostov’s main industries largely lie outside the purview of Western sanctions, which have focused on energy, finance and the arms trade. A further boost comes from a gleaming new international airport and a network of refurbished roads, built ahead of last summer’s World Cup, when Rostov was one of 11 host cities.
Rostov’s pitch includes a mix of old and new. Rather than dying, some Soviet giants here retooled. Industrial production in the region was up by 7% last year. Ms Zubarevich calls it “a new post-Soviet re-industrialisation”. Take Rostselmash, a hulking agricultural-equipment producer founded by the Bolsheviks in the 1920s. On the brink of failure in the 1990s, these days Rostselmash has been enjoying a revival. Agriculture is one of the rare bright spots in the Russian economy, helped along by government subsidies and counter-sanctions that banned food imports from the West. In 2016 Russia became the world’s largest wheat exporter. Rostselmash now sells to more than 35 countries and opened its first office in Germany last year. When Vladimir Putin gathered his advisers for a meeting on the development of regional industry earlier this year, they met at Rostselmash.
Beyond the old industry, a younger post-Soviet generation hopes to reorient Rostov. The C52 creative cluster, an abandoned factory transformed into a hip multi-use space, offers a glimpse of the vision. Now streetwear shops and a yoga studio fill the first-floor retail space. A central hall for events and film screenings features a “third-wave brew bar”, where a dreadlocked barista pontificates on the particularities of Ethiopian and Guatemalan coffee blends. Young programmers and designers sit hunched over laptops in the upper-floor offices. Alexander Kuleshov, C52’s owner, has been shifting towards IT and design firms with global client bases: following the devaluation of the Russian rouble in 2014, such outsourcing became good business. Like many of his tenants, Mr Kuleshov is determined to stick around town. “I’m proud that I’m not leaving, that I’m doing something here,” he says.
Ultimately Rostov remains subject to the same challenges that plague Russia at large. Overzealous inspectors squeeze business. Mr Kuleshov laments a fine he received for painting his residents’ logos on a wall facing the street, which the police claimed was illegal graffiti. Exporters gripe about the chilling effect of sanctions on business relationships. At the central market, Galya grumbles about rising petrol prices. Inna rues that in recent years her customers have been buying fewer crayfish, the local delicacy. “Times are tough and people are in debt,” she says. “In the end we all live in one country.”