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. Last Updated: 07/27/2016

For Business, Logjams Are All Too Real

Back in the old days of the Soviet Union, before the coming of capitalism, Western companies that wanted to do business here dealt with one company: the Soviet state.


The state was a straightforward trader, buying and selling goods and always paying its bills on time.


While business people are known to pine occasionally for those good old days of totalitarian stability, there was one aspect of the old game they could have done without. All too often, the key to concluding a deal was access to high-level officials.


How little things have changed is being demonstrated vividly this week by the visit of U.S. Commerce Secretary Ron Brown.


Twenty-eight business executives are trailing Brown around like children on a field trip through a circuit of meetings with top Russian officials including President Boris Yeltsin, Prime Minister Viktor Chernomyrdin, Finance Minister Alexander Shokhin and Foreign Economic Relations Minister Oleg Davydov.


The goal? "To break some of the logjams" holding up deals, Brown says.


Consider the position of the executives traveling with Brown, some of whose companies have invested tens of millions of dollars in Russia yet need the help of a U.S. politician to disentangle the "logjams."


The presence of the executives is either a measure of their faith in Brown's ability to help them or an expression of desperation in the face of mounting obstacles to their business plans. Many of these projects are too far along to abandon, yet too risky to continue.


Among the entanglements are a web of new taxes and recent hikes in existing taxes that have transformed projected profits into probable losses. There are also overlapping responsibilities and unclear relegations of power from the center to the regions, which can trap businesses in the same sort of bureaucratic loops that ensnare Russians daily. The difference is that they can cost businesses millions of dollars.


The U.S. business community greeted their gunslinger with genuine enthusiasm at a gathering of the American Chamber of Commerce on Monday evening.


Clearly, the business people relished the idea of Brown, a man known as a behind-the-scenes operator who is not afraid of straight talk, taking up their cause in high-level meetings. There is no guarantee that Brown will succeed where others failed, but indications are that he will wring at least a few concessions from the cash-strapped Russian government.


If so, then bravo to Brown. He has shown a willingness to, as he put it, rewrite his job description to meet the peculiarities of the Russian market. And as any business person will tell you, that is key to success in Russia.