Moscow's foreign business community expressed skepticism Wednesday that the ban on hard-currency transactions in Russia proposed by President Boris Yeltsin would actually come to pass.
While many Western entrepreneurs said they understand Yeltsin's desire to stop the ruble's free-fall, they remain doubtful over whether his words will translate into action.
"This has been discussed many times before", said Ellen O'Mahony, retail manager for the Irish House, which sells electronics, clothes and food items for hard currency. "We are taking it seriously, but until we see concrete evidence we won't act on it".
"I am very surprised by it", said rieten Davydova, public relations coordinator for the Aerostar Hotel. "How can they do this with all the foreign businesses and joint ventures operating here? The answer is, it's very unlikely".
Robert Langer, a lawyer for Chad-bourne & Parke, which represents many foreign entities conducting business here, said, "It's too dramatic to say that people will pull out".
Moscow's Western business community has become hardened to the government's radical statements concerning operating procedure here, as many in the past many have turned out to be false alarms.
Most recently, foreigners cite the threat of a 60-percent tax rate and the alleged ban of hard-currency transactions by July 1 as examples. Neither edict came to pass.
"We know that the government doesn't want to get rid of businesses dealing in hard currency", Langer said. - "As usual they just want to have more control".
Western businesses concur that Yeltsin's proposal to parliament Tuesday was meant to ease hard-line opposition to economic reform and show the government's intention of stabilizing the ruble, which plunged to 342 against the dollar from 309 on Tuesday.
"Yeltsin is under fire", said Michael Adams, chief executive officer for the advertising agency Young & Rubicam/Sovero. "He had to throw a bone to the conservatives. I suspect, though, like in the past, he will find a compromise".
Even if the hard-currency prohibition comes to pass, business people here raise the issue of loopholes.
For example, joint ventures are now required to exchange 50 percent of their hard-currency earnings into rubles. Businesses oblige, but most say they reconvert the rubles back into hard cash. While losing a small percentage on the transactions, it is a better option than stockpiling the increasingly worthless ruble.
When it comes to a ban on hard-currency transactions, the biggest potential loophole mentioned concerns the use of credit cards. Businesses here say that credit-card transactions in hard currency could skirt the ban, even though it would narrow their clientele. Few Russians have enough funds abroad to allow them to use charge cards.
The ruble's recent plummet, 10 to 20 percent each week over the past few weeks, has made the dollar the currency of choice for Russians and foreigners and has further widened the gap in the country's two-tiered economy.
The majority of Western business people here applauded Yeltsin's intention to bolster the ailing ruble but not his stated method. They said that if the ban came to pass, it could actually backfire against the economy.
Though the ban could conceivably dampen profit margins for Western businesses in the immediate future, no one appeared too upset.
"Of course, we hope that when they think up new laws, they'll think about practical side of doing business here", said Tatu Karkkila, administrative manager for Stockmann.
Christopher Coonen, sales and marketing manager for DHL Worldwide Express, was more cynical about the entire proposition.
"The speech Yeltsin gave was political one, not an economic one", he said. "I've been here long enough to know that when Russians say something will happen tomorrow, it will be delayed. If it happens at all".
While many Western entrepreneurs said they understand Yeltsin's desire to stop the ruble's free-fall, they remain doubtful over whether his words will translate into action.
"This has been discussed many times before", said Ellen O'Mahony, retail manager for the Irish House, which sells electronics, clothes and food items for hard currency. "We are taking it seriously, but until we see concrete evidence we won't act on it".
"I am very surprised by it", said rieten Davydova, public relations coordinator for the Aerostar Hotel. "How can they do this with all the foreign businesses and joint ventures operating here? The answer is, it's very unlikely".
Robert Langer, a lawyer for Chad-bourne & Parke, which represents many foreign entities conducting business here, said, "It's too dramatic to say that people will pull out".
Moscow's Western business community has become hardened to the government's radical statements concerning operating procedure here, as many in the past many have turned out to be false alarms.
Most recently, foreigners cite the threat of a 60-percent tax rate and the alleged ban of hard-currency transactions by July 1 as examples. Neither edict came to pass.
"We know that the government doesn't want to get rid of businesses dealing in hard currency", Langer said. - "As usual they just want to have more control".
Western businesses concur that Yeltsin's proposal to parliament Tuesday was meant to ease hard-line opposition to economic reform and show the government's intention of stabilizing the ruble, which plunged to 342 against the dollar from 309 on Tuesday.
"Yeltsin is under fire", said Michael Adams, chief executive officer for the advertising agency Young & Rubicam/Sovero. "He had to throw a bone to the conservatives. I suspect, though, like in the past, he will find a compromise".
Even if the hard-currency prohibition comes to pass, business people here raise the issue of loopholes.
For example, joint ventures are now required to exchange 50 percent of their hard-currency earnings into rubles. Businesses oblige, but most say they reconvert the rubles back into hard cash. While losing a small percentage on the transactions, it is a better option than stockpiling the increasingly worthless ruble.
When it comes to a ban on hard-currency transactions, the biggest potential loophole mentioned concerns the use of credit cards. Businesses here say that credit-card transactions in hard currency could skirt the ban, even though it would narrow their clientele. Few Russians have enough funds abroad to allow them to use charge cards.
The ruble's recent plummet, 10 to 20 percent each week over the past few weeks, has made the dollar the currency of choice for Russians and foreigners and has further widened the gap in the country's two-tiered economy.
The majority of Western business people here applauded Yeltsin's intention to bolster the ailing ruble but not his stated method. They said that if the ban came to pass, it could actually backfire against the economy.
Though the ban could conceivably dampen profit margins for Western businesses in the immediate future, no one appeared too upset.
"Of course, we hope that when they think up new laws, they'll think about practical side of doing business here", said Tatu Karkkila, administrative manager for Stockmann.
Christopher Coonen, sales and marketing manager for DHL Worldwide Express, was more cynical about the entire proposition.
"The speech Yeltsin gave was political one, not an economic one", he said. "I've been here long enough to know that when Russians say something will happen tomorrow, it will be delayed. If it happens at all".
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