Investors Cool to Zyuganov

Presidential candidate and Communist Party leader Gennady Zyuganov maintained his Dr. Jekyll image in his latest appearance before a group of foreign investors, promising there was nothing to fear from communism and that investment would be welcome under his administration.

But observers said that Zyuganov, faced with a renewed challenge from incumbent President Boris Yeltsin, was met by skepticism and even disbelief -- a contrast to the praise bestowed upon him by some foreign businessmen during a February meeting in Davos, Switzerland.

"I think there was a moment when we thought he would win, and people tried to reconcile themselves," said Ian Hague of Eastern Star Consulting Inc. "Now it's pretty clear that maybe he himself, and certainly the people around him ... are not appropriate for the current circumstances in Russia."

Zyuganov has led in presidential polls for months, but early this week a reinvigorated Yeltsin managed to break marginally ahead of his rival for the first time in a survey sponsored by The Moscow Times and CNN.

On the campaign trail in Novgorod on Friday, Zyuganov said he would introduce a new economic strategy if he came to power in the June 16 election, but he ruled out drastic renationalization.

"If we were to nationalize tomorrow in the same barbaric way that privatization was carried out yesterday, then there would be shooting everywhere the day after tomorrow," Reuters quoted him as saying.

The communist leader's speech Thursday was given at a conference for more than 50 top investors organized by the investment bank CS First Boston. The press was not invited to attend Zyuganov's address.

For the most part, Zyuganov followed up on past statements, including plans to renationalize enterprises which were not succeeding under privatization. Asked where he would invest if he were a foreign businessman, Zyuganov apparently suggested firms in need of new technology.

"He specifically commented that the oil companies need a lot of new technology ... and that that would be a good place to invest," said Glenn Carlson, managing director of Brandes Investment Partners Inc.

Since his first major platform before international businessmen at a luncheon of the American Chamber of Commerce in Russia last October, Zyuganov has turned double-speak into a virtual art form -- articulate and civil before the world one minute, ranting against capitalism to voters nostalgic for the Soviet Union the next.

Less than two months before the June 16 election, his party has yet to release its economic platform. Presentation of the document has been postponed several times, and Thursday, party officials said the plan would finally be unveiled May 15.

It is widely expected that whatever plan the communists adopt, it will involve some form of renationalization and efforts to regain capital which has fled overseas.

In addressing the CSFB gathering, Zyuganov projected what one participant called "an impressive presence," but others said his evasiveness left him wanting.

"I think he had a very skeptical audience," said Peter Bond, deputy general director of Bratsky Holding Company. "He sounded academic, like he didn't really understand the markets."

Businessmen who heard Zyuganov said he attempted to sound worldly and well-traveled. He also acknowledged that Russia's current negative image overseas is to blame for the country's failure to attract the foreign investment flocking to other Central and Eastern European countries.

But he offered little to assuage those concerned about how the country will make the transition from one administration to another, not to mention its effect on the powerful business empires taking shape in Russia.

"I don't think anyone knows. I don't think he knows how the power situation is going to play out after the elections," said one observer, who asked not to be identified.

Most investors interviewed said they felt it was unlikely a Zyuganov victory would put a halt to Russian reform, but there was widespread concern that a communist administration will steal the wind from the pace of market transition.

"I think the general mood is that he will be very damaging to free market reform," said Carlson. "He will slow us down on the road to the future."