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Russia: Turmoil Freezes Fast-Growing Washington State Trade

Tacoma, Washington, 25 November 1998 (RFE/RL) -- Washington State feels the reverberations of the economic turmoil rocking Russia. But there is much more to the effect than that.

The political and private business leaders of this Pacific northwestern state are exploring what they might be able to do to help relieve the ill effects besetting their new trade partners in Russia and around the western edge of the Pacific Rim.

Washington state's economic well-being depends more on international trade than any of the other 49 U.S. states. The people in Washington state doing business with Russia -- and the state operates a full-time trade office in the Russian Far East port city of Vladivostok -- remain convinced that its newest trade partner is destined to achieve its considerable potential, given its vast natural resources and skilled people.

In a series of three "round table" discussions held around the state this week by government officials and private business leaders, the agenda focused on ways to help Russia through its hard times. At these discussions, participants heard the latest facts concerning Russia, and particularly the Russian Far East, from Olga Romanjuk, the Russian who runs the Washington state trade office in Vladivostok.

But they were already well-aware of the virtual collapse of Russia's embryonic banking system, which for them has underscored how dependent Washington state has become on buying and selling goods and services abroad. Moreover, this state has, in the 1990s, become home to thousands of immigrants from the former Soviet Union, most of them evangelical Christians from Russia and Ukraine.

The rapid rise and even faster fall of the new Washington state-Russian trade shows clearly in the state's latest trade figures. If plotted on a graph, these figures describe a dramatic increase from nearly nothing five years ago to a peak last August and an abrupt falling off since Russia abruptly devalued the ruble and froze foreign debt.

Washington state's business community last year sold nearly $.3 billion in goods and services to customers in Russia. The weaker ruble today, as Washington state trade official Alison Krupnick told RFE/RL, prices American goods beyond the reach of about half of its new customers in Russia. And, she added, much of the remaining half, who can afford to pay, find it hard to do so because of the collapse of banking services.

But because this state's trade with Russia has fallen off sharply does not mean that its interest and involvement have evaporated, said Krupnick, who is with the International Division of the Washington State Department of Community, Trade and Economic Development, which organized last week's roundtable discussions.

She said, "We have a broad range of people here working on ways to alleviate the crisis in Russia."

The state, Krupnick said, is coordinating efforts among the hundreds of Washington-based private agricultural and transportation firms still doing business, or still trying to do business, with Russia to find ways to ease their suffering and restore their developing business relationships.

The European Union earlier this month agreed to supply $.5 billion in food aid to Russia in the next year. The U.S. government has announced its intention to ship more than 3 million tons of food aid to Russia, starting before the end of the year. Washington state wants to sell crops to the U.S. federal government for that aid package, and it wants part of it to flow through Washington State ports directly to the Russian Far East.

Washington state also is working with the federal government to explore ways of improving the flow of money, the lifeblood of business, in and out of Russia. Discussions are under way with the U.S. Export-Import Bank to find ways to guarantee payment for sales made, Krupnick said.

"Washington state had really begun to make great strides in developing trade with Russia," she said. Then the Asian "flu" hit the Russian ruble in August and the fast-growing trade with Russia quickly began to dry up. As a result, the great strides made over the last five years are turning into a great step backward -- as the state's trade figures with Russia show all too clearly.

(This is the first of two stories from RFE/RL Pacific Coast correspondent on the growing economic ties between the western U.S. and Russia, and what Russia's Pacific Coast partners are doing to help Russia through its economic crisis.)