Peace Corps to Boost Small Business in Russia

SITTING in a dingy yet cozy hotel room in this Pacific port city, Jim Freer's voice expresses the satisfaction of achieving a long-sought goal, mixed with a little disbelief.

Mr. Freer is head of United States Peace Corps operations in the Russian Far East, and over the past few months he has being laying the foundation for programs in the region.

"Thirty years ago, when [President John F.] Kennedy established the Peace Corps, it was envisioned that some day it would have programs here," Freer says. "But the whole thing has come about suddenly. Who'd have thought - just as recently as two years ago - that we'd have the Peace Corps here?"

Peace Corps programs in Russia became a reality in June, when director Elaine L. Chao sealed the deal by signing an agreement with Acting Russian Prime Minister Yegor Gaidar that established a program in the Russian Federation. Peace Corps targets call for 100 volunteers to be in Russia by December, based in Vladivostok and Saratov, a city on the Volga River.

The two cities will serve as operational hubs for programs throughout the Russian Far East and Volga River basin.

It is hoped that Peace Corps activity will expand to other Russian regions, as well as other former Soviet republics, including Armenia, Ukraine, and Uzbekistan. Volunteers are already operating in the Baltic states of Estonia, Latvia, and Lithuania.

The Peace Corps has traditionally undertaken development projects in the third world, such as building roads and irrigation networks. But in Russia the emphasis will be on small-business development.

"There's already an infrastructure here, but it's not used properly," Freer says. "The goal is to make all the pieces fit."

Because of the more sophisticated requirements in Russia, the Peace Corps volunteers being sent here tend to be older and more experienced than their counterparts going to other nations, says Ms. Chao. The average age of the Russian volunteer is 35, Freer adds.

According to the development plan, the Peace Corps will establish small business centers in various Russian cities, each staffed by up to five volunteers. They will be supplemented by eight to 12 resident advisers assigned individually to various cities.

The centers are expected to advise local government on economic planning and assist in the privatization of small businesses. Volunteers will also conduct training seminars and provide consulting services.

In addition, they will offer hands-on technical help to local business people and set up training programs.

"We have tried to modify the program to what the locals would like," Chao says. The Peace Corps, Freer adds, will start with the basics, teaching Russian businessmen the rudiments of marketing, distribution, and accounting.

He says the Russian response generally has been positive so far, but adds that there are lingering doubts among some about the Peace Corps' intentions.

It could take up to a year to change attitudes and persuade the doubters about the Peace Corps' altruistic plans, Freer says.

"There is a fear of carpetbaggers coming to sop up natural resources," he says. "Some can't believe that the US government is spending money to help them, and they think there will be some kind of payback in the end."

Adapting to living conditions in Russia, which is being battered by political and economic turmoil, promises to be a challenge for Peace Corps specialists, Chao points out.

"Volunteers will face a constantly changing environment," she says, "so they must be flexible and adaptable. It is also still very bureaucratic, and our volunteers will have to work with that."

But Freer says the most difficult thing for volunteers may be getting accustomed to the Russian way of doing business. Given the economic instability in Russia, he says, the guiding business philosophy is "live for the moment." Businesses are out to grab profits as quickly as possible instead of aiming for long-term development.

"Here, some are going to be lulled by this place, which seems European and Western," he says of volunteers. "Yet the mentality of how things work is totally foreign."

Changing the current commercial practices will be key.

"We're looking to impact attitudes, trying to instill confidence so they [Russian businessmen] can make it happen themselves."

If everything goes well, he says, the Peace Corps could help promote trade between the United States and the Russian Far East, an area considered by many to have high growth potential because of its Pacific Rim location.

"Peace Corps volunteers by their very presence should have a tremendous short-term impact by showing that America is ready to help," says Chao.

"On a grass-roots level," she continues, "they should also help over the long term - helping people understand what it means to live in a democracy and what it means to be tolerant."