FEBRUARY 3, 2003
EUROPEAN JOURNAL
By Paul Starobin
Mother Russia at War with Herself | While Putin pushes business to look outward, he's supporting security bureaucrats who harrass, or even expel, foreigners. This won't work
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For three centuries, Russia has lurched between welcoming foreigners and keeping them out. Now comes an interesting anomaly: The country is pursuing both courses simultaneously -- and with potentially disastrous consequences.
On one front, Russian business barons are rushing to sign up world-class foreign executives to manage their sprawling conglomerates. And with doors opening to foreign investment, European retail chains such as Ikea are flocking to Moscow and other high-growth markets.
On another front, a Big Chill seems to have set in. Russian authorities recently told the U.S. Peace Corps to pull its operations out of the country. Citing vague national-security concerns, officials in December refused to allow the AFL-CIO's Irene Stevenson back into Russia, where she has lived since 1989. And a cumbersome new visa system had Ikea executives cooling their heels for weeks in Sweden, awaiting permission to enter the very same country that's supposedly trying to lure them in.
UNCHECKED ZEALOTS. At the center of clash is President Vladimir Putin, who oddly personifies both dynamics. Part reformer, part ex-KGB agent and superpatriot, Putin presides over the new open-market culture fostered by Russia's embrace of global capitalism, yet is allowing the country's vast security apparatus to proceed unchecked.
Having consolidated their assets after bruising privatization battles of the 1990s, Russia's commodity barons badly need foreign experts to bring their export-oriented businesses up to international standards. That way, they can attract capital on Wall Street and in Europe.
For example, the Russian stewards of a newly created aluminum giant, SUAL Holding, recently hired as its Moscow-based president a South African native, Chris Norval, previously the director of strategic planning at global mining giant BHP Billiton, based in Australia. "My interpretation is that Russia is opening," says Norval.
Yukos (YUKOY ), a huge Russian oil producer, has hired David Owen, the ex-British Foreign Secretary, as chairman of its international division. "Business is a way of moving Russia into a fully democratic, market-oriented world -- and it is happening," Owen says.
CONTROL FREAKS. Yet, post-Soviet Russia is still in the grip of the seemingly endless conflict in Chechnya, which energizes the government's antidemocratic bureaucratic culture. Unlike most Eastern European societies, Russia never truly reformed its Soviet-era security agencies, so their mindset and habits persist. They are control freaks, pure and simple. "In many, many aspects, we are still living in the Soviet Union," says Grigory Yavlinsky, leader of the liberal Russian party Yabloko (see BW Online, 11/13/02, "In Russia, "Nothing Is Debated").
This is not to underestimate a serious internal security threat, demonstrated horribly in October by the brief, bloody takeover by Chechen terrorists of a Moscow theater. Ordinary Russians are understandably scared. But zealous authorities are now pursuing a wider crackdown on dubious targets.
Take the Peace Corps, which has 27 volunteers in Russia assigned to teach English and business courses in the provinces. Nikolai Patrushev, chief of the Federal Security Services, the successor to the KGB, told the Russian press that the volunteers could be spies "collecting information about the sociopolitical and economic situation in Russian regions, about government employees and administrators, and the course of elections." Calling such allegations "completely groundless," Peace Corp Director Jeffrey Hay says "this is a lost opportunity for both sides."
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Copyright 2003, by The McGraw-Hill Companies Inc. All rights reserved.
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