Washington, 24 January 1997 (RFE/RL) - The head of the independent
U.S. agency which insures American investment abroad says she has
been assured by senior Russian officials that the urgently needed
reform of the Russian tax system and other economic measures are at
the top of President Boris Yeltsin's agenda.
Ruth Harkin, President of the U.S. Overseas Investment Corporation
(OPIC), met last week in Moscow with presidential chief of staff
Anatoly Chubais, First Deputy Prime Minister Vladimir Potanin and
Deputy Prime Minister and Foreign Economic Relations Minister Oleg
She said they all assured her that a plan to completely overhaul the
Russian tax system is at the top of the Yeltsin administration's
agenda for legislation action immediately after the budget.
The International Monetary Fund (IMF) has been pushing Russia to
reform its tax system to make it more enforceable. But private
businesses have also been calling for tax reform because of the
inequities in the system which penalize honest business people.
Speaking to reporters in Washington Thursday, Harkin said Chubais
and the others said passage of provisions for so-called Production
Sharing Agreements -- needed for joint venture oil and gas
operations, for example, -- is also at the top of the agenda, along
with new measures for dealing with crimes against business and
measures on privatization to make the process more transparent.
Harkin was in Moscow for discussions with senior Russian officials
in advance of next month's meeting of the U.S-Russian Joint
Commission on Economic and Technological Cooperation chaired by Prime
Minister Viktor Chernomyrdin and Vice President Al Gore.
She said one issue she raised was U.S. concern that some of the
major privatizations coming up in Russia would not be transparent or
"One fear we have is that there might be a core of favored
investors that the Kremlin had in mind and somehow we would be denied
access," said Harkin, "but I was assured that was not the case."
She said the concern of many American investors is that in the end
they might be kept away from projects like oil and gas pipelines and
telecommunications. Particular concerns about the telecommunications
industry privatization have arisen in recent months, with even World
Bank officials saying it was being set up as a closed deal for
certain favored Russian bankers.
However, in addition to the assurances given to Harkin last week,
Russian communications Minister Vladimir Bulgak Tuesday said that at
least 25 percent of the telecommunications privatization would be
offered to foreign investors, with 24 percent being sold to domestic
Russian buyers. The rest is to be held by the government.
In addition to her discussions with Russian officials, Harkin took
time to check on some of the joint venture enterprises to which her
agency has sold political risk insurance.
"Almost all of our projects in Russia are successful," she said, which means they are making a profit and have potential for growth. "Whether they are realizing as much profit" as they wanted is another question, she said, but none are currently in financial trouble.
OPIC provided over $1 billion in insurance and financing for U.S. investment projects going into Russia last year, bringing the agency's exposure there to over $3 billion.
She said she expects 1997 to be another record year of U.S.
investment in Russia, but says that is "only the tip of the iceberg."
She says there's another at least $30 billion in potential
private American investment just waiting for economic and business
legislative reforms to be implemented.
Russia can't expect that money to wait forever, said Harkin, because
there are now many nations in the world looking for investment
capital which are implementing needed reforms more quickly. Still,
Harkin says she is "optimistic" about the future in Russia because
her optimisim is "based on our participation in projects that are