US, Russia, business, oil

[ChrisD(RJ)]

U.S. Lobbies Russia for Businesses
July 31, 2002
By SHARON THEIMER

WASHINGTON (AP) - Armed with harrowing stories of death threats and shadowy 
guards seizing their factories, American corporations have gotten the Bush 
administration to put the squeeze on Russia in a campaign that is benefiting

from good timing.

The message delivered by senior diplomats and President Bush is pointed: 
Moscow needs to clean up corruption and other obstacles to expanding
business 
if it wants to convince the world it belongs in the World Trade
Organization.

The beneficiaries span the gamut of corporate America from a politically 
connected vodka distributor and MTV to a Seattle investment firm and the 
Subway sandwich chain.

``We tell them (Russia) as one friend to another, `You've got a problem 
here,'' said Alexander Vershbow, the U.S. ambassador to Moscow, who is doing

much of the legwork for the companies.

Though corruption and government interference have long hurt domestic and 
foreign business expansion in Russia, the U.S. campaign has been staged at
an 
opportune time as Moscow aggressively seeks WTO membership.

``It's important that their rule of law apply to these cases and that
there's 
due process and there's transparency,'' said Commerce Secretary Don Evans, 
another key player in the effort to lobby Russia.

The Russian government says it has been trying to improve its record and 
believes it is ready to join the world trade body. The Bush administration
is 
supporting Russia's bid for the WTO, granting the country the key
designation 
of a market economy.

``We have substantial legislative reform in Russia and we are changing our 
legislation in order to put it in accordance to WTO standards,'' said
Nikolay 
Platonov, an attorney with the Russian trade representative's office in 
Washington.

``Maybe we have some corruptive practices in Russia, but I think these 
reasons don't have much in common with WTO rules and WTO standards,'' he 
added.

The campaign's origins are a textbook example of lobbying.

Companies reached out to members of Congress and administration officials, 
relaying detailed stories of being wronged.

A Seattle investment company, Euro-Asia Investment Holdings, wrote to Bush, 
Cabinet officials and members of Congress telling how a Russian grain
company 
failed to pay $6 million it owed - even after being ordered to do so by a 
Russian court.

The grain business mysteriously dissolved, leaving no recourse. One
Euro-Asia 
employee even received a death threat when she pressed to collect the debt.

Henri Bardon, Euro-Asia's president, described the business climate he 
encountered in Russia as ``jungle capitalism,'' alleging high-ranking
Russian 
officials offered to recover the debts in exchange for 20 percent to 50 
percent of the proceeds. He said Euro-Asia was left to pursue ``a company 
without assets, without money, without employees and basically no 
prosecution.''

The U.S. government placed Bardon and about a dozen other companies on a
high 
priority list, assuring the attention of Evans, Vershbow and other top 
officials.

Others on the list include MTV, Ohio quartz maker Sawyer Research Co., the 
Subway sandwich company and Russian animated films distributor Films by
Jove, 
based in California.

Allied Domecq Spirits & Wine USA, which also won U.S. assistance, is no 
stranger to political circles.

The company and its employees donated just under a quarter million dollars
in 
the last election - more than 90 percent of it to Republicans - and it
helped 
sponsor a GOP congressional fund-raising dinner headlined by Bush that
raised 
a record $30 million in June.

Allied Domecq is trying to free 55,000 cases of Stolichnaya vodka that the 
Russian government seized.

Rep. Dana Rohrbacher, R-Calif., a member of the House International
Relations 
Committee, and other members of Congress enlisted the help of U.S. Trade 
Representative Robert Zoellick.

``We have been in contact with our embassy in Moscow on this issue and will 
continue to work with both them and the company toward a prompt
resolution,'' 
Zoellick said, noting his office had also heard from Allied Domecq.

Ambassador Vershbow said Bush has delivered to Russian President Vladimir 
Putin his own message that increased U.S. investment in the country must be 
accompanied by better business practices and laws.

Bush also personally raised the concerns of American poultry producers that 
their chickens were being unfairly kept out of Russia, Vershbow said.

The National Chicken Council was another sponsor of the June GOP 
congressional fund-raising dinner.

Key members of Congress are adding to the pressure, suggesting they'll hold 
hearings to investigate Russia's dealings with U.S. companies.

``I keep telling my Russian friends here each of these unresolved disputes, 
some of which have been lingering for several years, scares off potentially
a 
dozen new investors,'' Vershbow said. ``I think after a year, it's slowly 
beginning to sink in.''

Sawyer Research Inc., an Ohio maker of quartz used in cell phones and other 
products, was forced out of its Russian factory by a private security force
- 
putting an $8.2 million investment in jeopardy.

Sawyer President Gary Johnson said Vershbow has traveled to Russia's
Vladimir 
region to secure the help of local government officials.


Companies reporting business disputes in Russia 
AP
July 31, 2002

Companies reporting problems with Russia that have made it onto the U.S.
government's high-priority list for help include: 

--ALLIED DOMECQ SPIRITS & WINE USA: The U.S. vodka distributor says the
Russian government confiscated 55,000 cases of its Stolichnaya vodka,
valued at about $2.7 million. The seizure is part of a larger dispute in
which the Russian agriculture minister contends the government, rather than
Stolichnaya's current maker, SPI Spirits, legally owns the American rights
to the famous Russian label vodka. 

--EURO-ASIA INVESTMENT HOLDINGS: The Seattle-based investment group says a
Russian grain company failed to pay $6 million it owed, even after being
ordered to do so by a Russian court. The company was unable to collect when
the grain business suddenly dissolved. A Euro-Asia employee trying to
collect the debt got a death threat instead. 

--FILMS BY JOVE: The Russian ministry of culture contends the
California-based distributor of Russian animation has no right to the
films. The company says it obtained the rights properly. 

--MOTOROLA: The communications and electronics company is involved in a
legal dispute with the St. Petersburg, Russia, tax authority. 

--MTV: The music television network was bumped from VHF into UHF and cable.
The U.S. government says the VHF license was illegally annulled. 

--PENNWOOD INDUSTRIAL PRODUCTS: Pennwood was in a joint venture with a
Russian company to mine and process a coal byproduct used in fiber optics.
The U.S. government says the Russian government pulled the Russian
partner's license, and that has prevented the U.S. company from recovering
its $5.5 million investment. 

--SAWYER RESEARCH INC.: The Ohio maker of quartz used in cell phones and
other products says it was forced out of its Russian factory by a private
security force, putting an $8.2 million investment in jeopardy. 

--SUBWAY: The U.S. government says the sandwich company was improperly
forced out of a prime retail space in Russia. 


Russian Oil Min: Russia Should Raise Oil Exports To US
July 31, 2002
DOW JONES NEWSWIRES

MOSCOW -- Russian Energy Minster Igor Yusufov told U.S. Energy Secretary
Spencer Abraham in Moscow Wednesday that Russia should increase its oil
exports to the U.S. and called the first shipment "a positive experience,
even though it had some problems."

Russia's second-largest oil producer OAO Yukos (R.YUK) delivered the first
tanker of Russian oil to Texas earlier this month to diversify oil supplies
as an alternative to Middle Eastern sources.

However, Cayman Islands-based oil trader Dardana Ltd. launched a $17
million lawsuit against Yukos claiming damages relating to a 1998 order for
Yukos to pay $6 million for work done by oil services company Petro
Alliance, now owned by Yukos.

Yusufov and Abraham have also discussed creation of oil reserve on Russia's
territory geared at increasing energy price stability, the Russian Energy
Ministry said in a statement Wednesday.

Abraham promised that the U.S. would provide Russia with expertise on
creating and managing the reserve, the statement said.

Ministry Web Site: http://www.mte.gov.ru