Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

American Aid For Russia's Auto Giant?

Among those slated to go to the United States with President Boris Yeltsin is the chairman of the ZiL automobile factory, Alexander Vladislavlev. The new head of ZiL is hoping for help from American corporations. By joining the president's entourage, he is trying to demonstrate to American business the great political weight his company has.


Vladislavlev, a former deputy of the Supreme Soviet of the Soviet Union, an active force in the notorious but fruitless Civic Union political alliance, is trying to find a new role for himself -- that of an important manager. The transformation of the respectable vice-president of the Russian union of industrialists and entrepreneurs, who was clearly aiming for a purely political career, into the director of one of Russia's most troubled companies was a surprise for many.


But in exchanging his work in the public sphere for a director's job, Vladislavlev has not quite abandoned politics. In fact, his real political weight has increased. The head of a factory like ZiL was always part of the Party and economic elite of the Soviet Union. In Russia the director of ZiL is automatically included in the top ten most influential industrialists in the country, with direct access to the president and prime minister.


Even when they cannot turn the entire economy in a direction favorable to them, the directors of Russia's superfactories have always had enough influence to get special privileges for their companies from the government.


In the past two years ZiL has been in crisis. There is no market for its product, and the factory often does not receive payment for what is sold. The production of trucks has fallen from 210,000 in the best years to 34,000. This summer, every day the factory was in production it lost 7 billion rubles, or over $3 million.


But there can be no question of the factory going bankrupt. Normal rules do not hold sway for companies like this.


By special decision of the government, the factory has received a tax deferment for the first six months of 1994. The factory's debts of 300 billion rubles will be frozen for 17 to 18 months.


Also, the state is going to pay the debts to ZiL accumulated by the CIS countries. Russian credits to these countries in the current year will simply be reduced by the amount of the debt. The Defense Ministry and the Agricultural Ministry will be forced to buy a certain number of vehicles.


All of these privileges have been given to what is, essentially, a private company. The state today owns only 25 percent of the shares in ZiL, 10 percent of which are supposed to be sold to a foreign investor. It is to find such an investor that Vladislavlev is going to the United States.


But it will not be easy to find a serious buyer. Experts estimate that ZiL will need approximately $1 billion for reconstruction. It is rumored that there were investors willing to invest this kind of capital, but the old director, Yevgeny Brakov, refused to have anything to do with them. The investors left for good, the government could only come up with $35 million, and even that sum was for the manufacture of 24 special limousines for the highest government leaders.


Will the new director be able to find new, rich investors in the West, even with the president's help? American capitalists are less tractable than Russian ministers.