UPDK Faces Market Music

UPDK, the bureaucracy created by Lenin to oversee virtually every aspect of life for foreign residents in Russia, is struggling to cope with business competition, an image problem, and financial woes, the organization's new chief said.


Yury Proshin, 47, who took over this summer as UPDK's director, said that UPDK's transition to the market economy has been a tricky one.


An experienced bureaucrat who was the mayor of Solnichnogorsk for nearly a decade, Proshin became deputy minister of Social Security of the Russian Federation in 1989. Two years later, he became deputy manager of the Soviet Ministry Committee.


After the failed August putsch and Boris Yeltsin's rise to power, Proshin rebounded as a deputy in the president's domestic directory.


On July 31, he was named head of UPDK, which has not been held in high esteem among many foreigners over the years. Proshin is aware of the image problem with his clientele of about 30, 000 foreigners, and he is trying to address it. But that is not easy, he said. One of its biggest problems is a power struggle over property with the Moscow city government.


"We have more than 30 embassies which have applied to us for more" office space and houses", Proshin said. "But the city thinks it is more profitable to rent buildings to businesses rather than to embassies".


He explained that embassy rents are subject to reciprocal agreements with various countries. But city officials prefer to rent buildings based on Moscow market prices, he said.


As a result, UPDK, the city and the Ministry of Foreign Economic Affairs are discussing the formation of a joint stock company that will allow the sale of embassy buildings and other properties.


Though embassies will most likely continue to deal with UPDK for chancery space, they are renting some residences from Western joint ventures. Many foreigners who are not diplomats are also leasing their own flats.


To compete, UPDK offers its alternative upscale project: Park Place, an upscale $80 million residential-commercial complex that is scheduled to open in December.


Such expensive housing, however, is not an option for most foreigners and UPDK is facing criticism from foreigners who are concerned about the


growing number of crimes in Moscow. "The criminal problem is one of the important problems that concerns all foreigners here", Prushin acknowledges. In response, UPDK is beefing up security at some complexes, adding guards at entrances and tightening up security at parking lots.


Security will also be addressed at a meeting that is planned soon with UPDK, foreign ambassadors and the Ministry of Internal Affairs, which hires the militsia guards at UPDK houses, Proshin said.


While trying to cope with the crime problem, UPDK hopes to expand and improve its services for foreigners, he said. The entity plans to start dry cleaning operations and put in a new kitchen at Botkin Hospital, he said.


In the new Russia, Proshin is aware


that UPDK must compete head-on with private enterprise. "If we do it badly, we will lose customers, and then we will go bankrupt", he said candidly


UPDK's operating budget is already


a concern. The organization does not get any money from the Russian budget and has to give the state half its hard currency earnings.


To help improve its financial standing, UPDK has begun to diversify. In 1990, it bought 49 percent ownership in a lumber enterprise in Cambodia. Plan are in the works to start a dairy at a state farm near Moscow, Proshin said


In the years to come, Proshin anticipates bigger changes for UPDK. "I think that 10 years from now there will no longer be a Glav UPDK. Instead, it will become a lot of different firms", he said.