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Russia's Political Woes Aren't Stopping Investors

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DESPITE an impressive list of problems - the war in Chechnya, international financing delays, and privatization reversals - Russian officials and Western venture capitalists expect foreign investment here to be strong in 1995.

``In any historical process you have a couple of steps forward, a step backward, and zigzags along the trend line,'' says Peter Charow, director of the American Chamber of Commerce in Moscow. ``But I don't think the process in Chechnya spells doom for democratic reforms.''

Part of the lure for investors is that Russian state-owned firms are still available at low prices. Last summer, Russia's largely untapped market became one of the most fashionable for foreign investors. But because of economic and political uncertainties, direct foreign investment dropped last fall to 1/10th of its $500 million monthly rate during the summer.

Still, Alexander Gorokholinsky, head of the Russian Economics Ministry's international investment department, says he expects as much as $2 billion to be invested in Russia in the form of charter capital this year. That's up from $1.2 billion last year.

``We cannot perceive any negative manifestations, either on the part of companies or individual investors,'' Mr. Gorokholinsky says. ``All concluded projects are continuing, and not a single company has canceled a single contract.''

Most foreigner investors, while aware of the risks of doing business in Russia, still think more about the millions of dollars they could make than the millions they could lose.

``Look at the number of people employed here by Hewlett-Packard, Bayer, Rank Xerox, and other people, and tell me the investment climate is bad,'' says Bruce MacDonald, director general of BBDO Marketing in Moscow. ``I'm not buying it.''

One step that could encourage investment was the firing late last month of Vladimir Polevanov. The controversial chairman of the State Property Committee suggested renationalizing the petroleum and metals companies and described foreign investment as a ``threat to national security.''

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