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States Make Russian Connections

US states and the republics of former Soviet Union find they make natural trade partners

OKLAHOMA is sharing its oil and gas expertise with Russia's energy-rich Samara region. Alaskan and Russian experts are working together on education and transport projects. New York state is helping Lithuania start small businesses and will host the world's first Russian trade center.

American states are scurrying to forge and firm up their Russian connections. Scott Bailey, a trade specialist with the National Governors' Association (NGA), says at least 17 states are very active. Many have sister-state ties.

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For the moment many of the links involve technical assistance and joint ventures. Yet the former Soviet republics are big importers of United States wheat and corn, and their natural-resource reserves may yet make them strong trading partners.

"The potential is just so magnificent that it's like being on an abyss and waiting to jump off," says Margaret Chapman, a trade specialist with the American Committee on US-Russia and Independent States Relations, a nonprofit public-policy group.

Even in summer the pace of activity is intense:

* A high-level Russian delegation from the region surrounding Moscow flew into Indianapolis on June 28. The officials, who signed an agreement with the Indiana-Soviet Trade Consortium and Indiana Gov. Evan Bayh last December, are planning ways in which Hoosiers can help them democratize, develop a market economy, and a system of compensation.

* Several delegations of business and university leaders from Iowa are flying into Ukraine and the Stavropol region of the Russian republic these days to give lectures and technical advice at two new agribusiness centers. Topics range from fertilizers to livestock production. Iowa hopes eventually to establish 12 agribusiness centers in former Soviet territory.

The Iowa International Development Foundation, the public-private organization that arranged the deal, recently brought in a cargo plane of soybean seeds and farm equipment to supplement the seminars. "Our objective is to demonstrate our farming methods and try to help to help them improve theirs and their yields," says Philip Smith, director of Iowa's Washington, D.C. office.

* Many other states are dispatching trade missions. One from Kansas, for instance, will visit the St. Petersburg region in a few weeks to follow up on an agreement signed between Kansas and Russian officials late last year.

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Colorado Gov. Roy Romer and Iowa Gov. Terry Branstad plan to host a conference in September that will probably be held in Colorado Springs and attended by at least 20 states. Its aim is to develop a network of US states that want to provide agricultural help to the former Soviet Union.

Governor Romer, who has his own Soviet Task Force of business and education leaders and is the incoming NGA chairman, has long advocated closer ties with the former Soviet Union. American governors and states, he says, are uniquely well-equipped to help with the transitions underway there in both government and the economy.

Getting in on the ground floor gives US states and their business leaders a distinct advantage. Yet figuring out how to get paid for products and services remains difficult.

As Iowa's Phil Smith says, "You can sell them [the former Soviet republics] anything right now as long as you lend them the money to buy it."

"At one point in our negotiations [the Russians] were offering us everything from diamonds to jet fuel for Kennedy Airport," notes George Rossi, assistant director of the World Trade Center, which will house the retail, office, exhibition, and restaurant space of the new Russian-trade center.

Still, he and his colleagues insisted that a letter of credit from a Western bank back the 20-year-lease signed with Russian officials.

Knowing who has the authority to make decisions and cutting through bureaucracy also are challenges. Oklahoma Governor David Walters, the first governor to visit Russia after the coup, says the mid-sized oil and gas firms in his state are more flexible - and thus better equipped - than many larger, more bureaucratic firms, to negotiate deals with their Russian counterparts.

Governor Walters says the state role is not crucial for companies seeking business ties with the former Soviet Union. Yet, he says states often can help to smooth the way.

As the US-Russian connection evolves into stronger trade ties, however, coordination by industry-oriented organizations in both the US and the former Soviet Union begins to make more sense than government-to-government relationships, says Scott Robertson, president of the Denver-based Bridges Corporation.

That firm was launched last summer as the Colorado Soviet Trade Association. People came from such distances to its monthly meetings and had so many questions that Mr. Robertson realized a national organization was needed. The association's name was changed to Bridges in February. Chapters meet monthly in 14 cities and will expand by another 20 in the fall.

Says Robertson: "The companies that are really getting the business done are the mid to small companies. They can see the opportunities and solidify relationships much more quickly. They're more mobile than the larger ones."

Trade specialist Margaret Chapman insists that practical experience will be the best educator for businesses in the former Soviet republics.

She says: "I think you can do a whole lot of goodwill work but the bottom line is going to be when businesses do business with each other. There's no better way to learn for the Russians and the other republics than to start their own little businesses or to get involved in a joint venture or something and learn by necessity."

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