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. Last Updated: 07/27/2016

The carpetbaggers: Their time is ending

"You know why my prices are so low? " the unmistakably American caller said. "Overhead. Low overhead".

It's no stretch to imagine what the overhead costs entail. A private flat in some standard tumbledown building with suspicious neighbors. A fax. A couple of local retainers, one with a Lada. And, every three months or so, a return ticket from California. At the other end - another fax in a home-office in the second bedroom.

After the U. S. Civil War, when northern entrepreneurs swarmed to the ravaged South, they had the same idea. Their overhead costs covered train tickets, trinkets and product samples, and the piece of luggage that contained their inventory, the carpetbag.

But then, as now, there was one cost which never got calculated into overheads. Risk. In 19th-century America, the risk was of falling foul of some local customer and being ridden out of town on a rail. Today the risks are much greater than that.

Almost exactly a year ago, my friends Bob and Richard were working on the deal of a lifetime, a deal to square away old debts and finance new futures. I will not identify them, for obvious reasons, but like my phone caller, they too are from California.

It was one of those massive and ornate rubles-for-goods-for-dollars deals so frequently heard about at the time and so rarely consummated.

Earlier in the year, another such deal, involving a small firm called Dove Trading had been brought to a grinding halt by the KGB. Charges were never laid, but there was sufficient legal greyness to the arrangement that it threw a dark and ominous shadow over the formula, sending the parties to dozens of other such negotiations scattering for cover.

But sure enough, within months, as the black-market rate for the ruble climbed, and the potential profits soared, these parties returned to their smoke-filled hotel rooms and picked up where they had left off.

Bob and Richard were among them. They say now the Russian partners in the transaction were literally scheduled to conclude banking arrangements when, on Aug. 19, other more historic events intervened, scattering the participants once again.

Bob and Richard, reputable entrepreneurs, would be called carpetbaggers now. The economists and accountants moving in on fat per diems, and the consultants following the trail of IMF-World Bank contracts, sniff a bit before discussing the regrettable inevitability of the carpetbagger stage.

They will also concede that this stage is essential, and slowly drawing to a close here. But there remain huge risks - political as well as financial.

But, increasingly, the risks are being covered by bilateral and multilateral agreements which, ultimately, will bring the cost of underwriting them within reach of the normal Western corporation.

These days Richard heads a new non-profit association in Washington. He seldom visits. Bob is still plugging away, looking for deals.