Saturday, December 15, 2007

Paid in dollars, expats struggle to make a living

Erica Nevins's faith in the dollar was shaken the moment she pressed a crumpled $1 bill into the hand of a little girl begging for money on the streets of Marrakesh, Morocco.

"I don't want this. This is nothing," Nevins recalled as the scornful reaction of the child, who demanded more.

Since then Nevins, an American fashion executive, has replayed that moment over and over in her head as she confronted the harsh reality of living on a dollar income in Paris and then moving to pricey London. "The absurdity of this is that it's so true," she said. "A dollar really means nothing. It's scary."

With plunging exchange rates, American expatriates whose pensions or incomes are paid in dollars are scrimping. No more dinners out when a bottle of Perrier for €3.50 translates to $5 and no more Christmas shopping binges when a shiny iPod for €159 is the equal of $230.

And ultimately some are moving to greener pastures that match the color of their money.

"Those that can hold out are holding their breath and we're hoping for a return of the dollar, but those that can't are going," said Susie Bondi, an American who has lived in Paris for 12 years, but is moving to Vienna in January with her husband, Fred, to stretch their pension dollars in a city with a lower cost of living.

The past six months have been anxious for expatriates, with the dollar sinking against the euro, the pound and currencies from the Czech koruna to the Costa Rican colón. Those declines are accelerating the flight of expatriates in Europe, according to tax attorneys who listen to the woes of clients who are giving up because they see no relief in sight.

The zeitgeist is best summed up by the rapper Jay-Z who last month released a music video of himself cruising the streets of New York in a shiny Bentley with a flash wad of €500 notes.

Even U.S. government employees are feeling the pinch in countries with strong currencies like the Czech Republic, where the koruna has gained 17 percent this year against the dollar.

Radio Free Europe, the U.S.-backed international broadcaster headquartered in Prague, is suddenly facing a housing crisis for many of its 500 employees. And the news organization's new chief executive, Jeffrey Gedmin, ranks the weak dollar with attacks on journalists around the world who have been kidnapped in Baghdad and jailed in Azerbaijan as one of the critical issue that it is facing.

"For me it's become an ethical issue," said Gedmin, who was in Washington this month lobbying U.S. legislators for relief and trying to raise funds privately to aid hard-hit employees. "I have a genuine ethical issue to take care of people who are trying hard to take care of their own countries."

Employees who have long been paid in dollars pumped the money into the local economy and to landlords who in the past gratefully accepted dollars when the currency was strong.

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