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Russia: U.S. Ambassador Urges Investment In 'Land Of Opportunity'

By Wendy Schatzman

Brussels, 19 November 1998 (RFE/RL) -- Despite Russia's current economic crisis, some U.S. representatives, led by America's ambassador to Moscow, are calling on American business to keep investing in Russia.

Speaking at a trade conference in Brussels earlier this week (Wednesday), U.S. Ambassador James Collins said that "American companies should not be put off by the gloomy media portrayal of Russia." Collins said that American companies should see Russia as a land of opportunity, especially regions other than the Moscow area. He added that companies also need to understand that mayors and governors in many outlying regions are "very inviting of U.S. foreign investment."

The Brussels conference, hosted by the United States Trade and Information Center (USTIC), is part of the organization's mission to link the American public and private sectors with the markets of Central and Eastern Europe, Russia and the CIS.

John Peters, an economic official at the U.S. Embassy in Moscow, said that the recent economic problems in Russia have created new chances for business in areas as diverse as commercial banking and the manufacture of pet food.

When asked if the Americans were wanted in Russia, Timothy Tarrant, director of the American Business Center in the city of Nizhny Novgorod, said: "They very much are." He added that the local government administration of Nizhny Novgorod has seen the Germans come, and the Italians with their $850 million in investment, but is now asking: "Where are the Americans?"

Tarrant cited several benefits that the Russian's could offer to American businesses. He noted that Russia has a highly educated workforce, and numerous scientific institutes in various cities that can provide a lot of potential for American companies.

Toby Gati, a senior international adviser at the Washington law firm of Akin, Gump, Strauss, Hauer and Feld, told our correspondent that American reluctance until very recently to invest in Russia's regions has its roots in the Cold War.

"Investment in Russia in general is limited by American companies and (of) the investment that is made, most of it goes to the capital. I think there are several reasons for this. In the first place, when most people think of Russia, they think 'Moscow.' This is not an economic thought - it really comes from the whole Cold War period, when the United States and the Soviet Union were rivals and it was Washington versus Moscow. And I think this has an impact on what people think Russia really is - which is the capital city. The second is that (Moscow) has had a very dynamic mayor - other places did not have dynamic leaders and frankly, there was very little power in the regions. So American companies were not that interested in going outside Moscow. That's really changed now but the perceptions have lagged quite a bit."

Gati added that the focus in Russia is now turning to production and Europeans have been more sensitive to the change. Gati said that at first, Western investment concentrated on the financial and banking sectors as the Russian government wanted and needed the money. But she noted that now, under Prime Minister Yevgeny Primakov, "the government has made it clear that they will protect, support, defend and encourage investment" in more tangible sectors.

The views expressed at the Brussels conference, however, stand in sharp contrast to speeches delivered earlier this month by senior U.S. foreign policy officials. Deputy Secretary of State Strobe Talbott and Deputy Secretary of the Treasury Lawrence Summers both stressed that Washington could not back loans to Russia from the World Bank or International Monetary Fund (IMF) under Primakov's new economic programs.

Both Talbott and Summers said policy ideas advanced so far by Primakov will likely result in hyperinflation and economic turmoil, which could lead to widespread instability.

Talbott, in a speech at Stanford University on November 6, warned that "money from outside will do no good if it is inflated away or if it pauses only briefly in Russia before ending up in Swiss bank accounts and Riviera real estate." He also noted that as Russia distances itself from the West on the economic front, there may be heightened tensions over security and diplomatic issues.

(Schatzman is a Brussels-based contributor to RFE/RL.)