Within the corridors of power in the United States, especially since the convincing victory of the Republican Party in last November's elections, it has become increasingly unpopular to speak about financial aid to Russia. In the meantime, though, the Russian government continues to count on about $13 billion in loans and has written this into the 1995 budget that was passed by the Duma on Wednesday.


It is natural to wonder whether this money, if it ever makes its way to Russia, would actually filter down to the sectors of the economy that are in a position to use it most effectively. Or would it instead, as in the past, wind up in the hands of those people who are closest to the structures of government? A recent poll conducted by the Center for Economic Reform revealed that only 0.3 percent of the small businesses surveyed across Russia (just five out of 1,628) had managed, through the help of professional associations, to get any international assistance. None of them was located in central Russia, which includes Moscow and 11 other districts.


Russia's managers know that even the little money that does reach Russia melts away to nothing, going to support the government and the overly bureaucratized structures of the executive branch. Moreover, the lion's share of the funds that are promised turn out in the end to be pure fiction, such as the $24 billion in Western aid that was at one time promised to Mikhail Gorbachev.


I think that most Russian managers are convinced that the United States and Western Europe have no real desire to help finance competitors in the East. When the managers of small businesses were asked what measures should be taken to support small businesses -- defined in Russia as businesses employing fewer than 200 people -- only 6.3 percent agreed that the government should help them seek out and secure funding from foreign organizations. It would seem that the vast majority of businessmen do not feel that this is a proper function of government.


Despite the fact that Russia continues to beg for Western aid, credits and investment, we have begun to hear more and more of late from the very same people doing the begging that Russia really does not need Western help. Instead, they say, we need a level playing field in the area of trade. We need the elimination of tariffs and other restrictions that are keeping our businesses from breaking into Western markets.


However, with the exception of Moscow, there is still relatively little private business in Russia. Moreover, the country's largest and most influential enterprises, the formerly state-owned monsters that are in a condition of permanent collapse, are far from being able to compete in foreign markets.


But what about Russian small businesses? Our research into the problems facing small businesses today throughout Russia shows that only 6.5 percent of them -- 106 of 1,668 -- were created and organized with the primary goal of exporting their production to countries other than those of the former Soviet Union. Although nearly 18 percent would be interested to learn more about Western market conditions and potential partners in the West, the majority realize that Russian goods simply cannot compete in Europe or the United States. It seems that, at the present stage, even people who are interested in such information are motivated more by curiosity than by concrete intentions.


It is possible that this attitude merely reflects the provinciality and lack of vision of Russian businessmen, but it is a fact. Only Russia's energy exporters currently have a real, immediate interest in Western markets. For the vast majority of Russian producers, those who manufacture finished products, access to Western markets is closed by the inability of Russian goods to compete: Only 1.4 percent of the businesses in our survey said that they had been able to export any of their products.


On the other hand, Russian businessmen are considerably more interested in possibilities for Western investment. In another survey conducted by the center at the request of the U.S. International Development Agency, 23.9 percent of businesses surveyed said they are most interested in getting additional information about possible foreign or Russian partners for joint production.


However, Russian businessmen have learned not to put any trust in promises of a "golden rain" from the West. They even understand that the West has enough problems of its own, and little attention to spare for Russia. Finally, they know that competition for investment on the international market is fierce. A lot more people are looking for investment than are looking to invest.


Potential investors have considerable opportunity to choose, and it is maybe a little ironic that they are now choosing Communist China over Democratic Russia, with its free- market economy. According to a recent report by John Ross, economic adviser to Britain's Labour Party, the world's leading corporations invested only $278 million in Russia in the first half of 1994. In the same period, they put $14.7 billion into China. For Russia, these figures represented a decline from 1993; investment in China, meanwhile, rose 54 percent.


Now that the conflict in Chechnya has erupted into warfare -- a war that will cost trillions of rubles and may well break the Russian economy -- Russian businessmen have lost all hope of receiving foreign money. Statistics already bear out this point of view: In August 1994 foreign investors committed to purchasing $500 million worth of shares in Russian companies. In November, as the Chechen crisis heated up, that figure fell to $300 million, and when the war exploded in December, pledges of investment fell to only $100 million. So far in January, now that the real long-term costs of Chechnya are obvious to everyone, foreign investors have tendered only $20 million.





Vladimir Buyev is a researcher at the Center for Economic Reform. He contributed this comment to The Moscow Times.