US Businesses See Bright Prospects in Soviet Union
THE dramatic events in the Soviet Union, instead of scaring United States businessmen away, have convinced them that the country is poised to make substantial economic reforms.This widely held view is a sharp reversal of the go-slow attitude many US businessmen adopted before the coup. If the optimism holds, private American investment in the USSR is sure to increase. "Very clearly, the forces in favor of change have won out," says Peter Pettibone, head of the New York City Bar Association Committee on Soviet Affairs. "Now's the time," says Patrick McGovern, chairman of International Data Group, a Boston-based publisher of information technology magazines and newsletters. "We should accelerate our plans to invest and help." Many pitfalls lie ahead for US businesses in the Soviet Union, says Michel Bergerac, chairman of his own private investment firm in New York that deals with the USSR and other countries. Serious reforms lie ahead. Big differences remain between the republics and Moscow. Yet, something important has changed since a coterie of hard-line officials tried to wrest control of the USSR last week. The coup has galvanized the populace, say US businessmen familiar with the Soviet Union. "They're energized," says John Cavanaugh, chairman of Summit Ltd., a food-processing representative and consulting firm based in Omaha, Neb. "This is the necessary catalyst to encourage people that they can't go on drifting," says Jenik Radon, whose international legal firm specializes in helping Western and Japanese businesses in Eastern Europe and the Soviet Union. "They have to move." So, US businessmen - even longtime skeptics of the reform process - are taking a new look at business prospects in the USSR. "We're going to put our foot on the accelerator, and we'll see how the car responds," says Robert Krattli, president of Scott-European Corporation. The Montpelier, Vt., manufacturers' representative and trading company focuses on the Soviet market. The renewed optimism among US businessmen is a far cry from the euphoria that prevailed in the late 1980s. Then, entrepreneurs rushed into perestroika (restructuring) with little understanding of the Soviet market and its difficulties. "Many of them [were] frankly amateurs - and they're paralleled on the Soviet side," says Michael Rae, a trade representative who has dealt with the Soviets since the early 1970s and now heads Argus Trading Ltd., headquartered in Rockville, Md. Soviet companies compounded the problem by entering joint venture deals with little appreciation of their obligations. Shipments weren't fulfilled. Payments due two years ago are still unpaid. Foreign businesses still operate in a legal gray area, because Moscow and the republics have passed a bevy of contradictory laws. Soviet business experts believe the proposed treaty between the Kremlin and the republics should clear up most of the legal contradictions and, just as important, move more power and authority to the republics. As problems mounted with the USSR, euphoria gave way to skepticism, which reached a new low when Soviet tanks rolled into the Baltic republics in January. Even this summer, after tensions died down and hopes increased about a new treaty of union, many American businessmen remained skeptical about Soviet reform. After six months of planning, International Data Group got the final papers in July for a $2 million project to install an electronic and editing preprocess system in Moscow. Company officials refrained from signing the papers, Mr. McGovern says, because they were nervous about the growing public dissatisfaction with Soviet leader Mikhail Gorbachev. The coup changed their minds. The company now plans to put out Computerworld USSR and other Russian language magazines, books, and newsletters starting next February. Marty Saepoff, president of Dynasil Corporation of America, had even more unfortunate timing. He planned to announce the official registration of his company's Soviet joint venture on Aug. 19, the day most Americans first learned of the coup. "I was just shaken by it," he recalls. "All the work of two to three years seemed to be going down the drain." The coup crumbled so rapidly, however, that Mr. Saepoff was able to make his announcement Friday. The Berlin, N.J., company makes synthetic fused silica, used in precision optics, semiconductor, and defense industries. By teaming up with an institute of the Soviet Ministry of Defense, which makes other kinds of synthetic fused silica and quartz, Dynasil expects to broaden its product line.