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COLUMN ONE : Chaos on Capitalist Frontier : Business pioneers in the Soviet Union are in hostile territory. But they endure mistrust, inefficiency, even danger to chase the dream of economic freedom.

November 23, 1991|JONATHAN PETERSON | TIMES STAFF WRITER

MOSCOW — For all the headaches of daily business life in this chaotic land, Roman Nicolaev didn't feel especially put upon--until a mysterious bomb set his shop on fire.

On that day last April, Nicolaev came to see the true challenge of being a Russian entrepreneur: "You can't call it business, what's going on in the Soviet Union," said the store manager, 39, whose neatly trimmed goatee and shaded wire-frame glasses give him a vaguely bohemian look. "We're just moving toward a civilized level."

The Wild West endures in 1991, thousands of miles to the east inside the Soviet Union, where the business frontier is a place of chaos, mistrust and, occasionally, even violence.

Telephone calls often go dead--or are interrupted by strange, confused voices--domestic flights commonly run 10 hours late or more, office space and basic supplies can be maddeningly scarce, laws are vague or nonexistent and confidence in the future is plunging. Wary bureaucrats, organized crime and a public that remains deeply suspicious of capitalism round out the hostile picture.

"They don't even have checkbooks yet," said Alex Lyudmirsky, a Soviet emigre in the Sherman Oaks area of Los Angeles who continues to do business in his homeland. "Most of them carry cash in bags."

Yet for all the frustrations, a growing cadre of home-grown entrepreneurs has emerged to chase new opportunities and test the blurry boundaries of economic freedom. Their uncertain fate, some argue, has taken on poignant meaning in these tortured economic times, symbolizing no less than the fate of reform--and perhaps even the survival of their country's shaky economy.

Today, their longstanding struggles are reaching a critical moment, as Russian Federation President Boris N. Yeltsin battles to cut back the bureaucracy and let market forces spread through the troubled nation.

"We believe only entrepreneurs may save Russia," declares Mikhail V. Kouriatchev, acting chairman of the U.S.S.R. Chamber of Commerce and Industry.

They are people like Tatiana Pakina, 43, the cheerful, blond-haired manager of a beauty parlor whose skirmishes with the bureaucracy almost got her fired a few years ago. "Now we work, we earn money--and we're free people," she said, as haircutters snipped away in the next room of her salon. "And \o7 free\f7 is the key word."

Vladimir A. Naroditski, 36, is another. The Moscow investor has teamed up with Lyudmirsky and others in a project to harvest sea urchins in Russia's Far East and market them to sushi enthusiasts in Japan. "Millions of dollars" can be made in the coming years, he says of the quest. "Not one, not two, not even five."

And they are stoic souls like Nicolai Krupnikov, a merchant whose clothing rack includes a pair of "Live" Strauss & Co. jeans made in Thailand, along with Turkish sweaters, running shoes, calculators and other items not easily found in state-owned shops. "Absolutely wild," is how he describes the Soviet marketplace.

Wild, but also increasingly popular. In just the last few years, tens of thousands of enterprises with at least partial private control have cropped up throughout the Soviet Union, with many concentrated in Moscow and other major cities.

While the majority of entrepreneurs labor in modest shops, restaurants and service firms, at least a few may be striking it rich. This fledgling elite drives new cars and owns expensive Western clothes and electronic gadgetry, unlike the vast majority of Soviets. There even is a "young millionaire's club"--ruble millionaires, that is--composed largely of commodity traders who are creating a private alternative to the state's broken system of distribution.

"It's not that difficult to earn a million rubles (more than $21,000) in this country," maintains Victor M. Gurdin, 24, a broker at the private Alisa commodity exchange. "It's more difficult to prove you earned it in a decent way."

The vast majority of business people only fantasize about such difficulties, however. Just to survive in the primitive Soviet marketplace is their overarching concern. Krupnikov, for instance, is trying to open a second retail shop, but the carpenters he relied on are more than four months behind in installing counters and shelves.

The lack of contract law and agreed-on standards of business behavior, not to mention a shortage of building materials, leave him little choice but to wait.

"I get promises every day," lamented the tired-looking merchant, 41, in an apartment over his store, which is just a 10-minute walk from the Russian Parliament.

At least he has space: The largest country on Earth has a decided lack of it. With laws protecting property rights unclear, and an undeveloped commercial real estate market, firms must scramble for property any way they can. Naroditski, the investor, got his office through a personal tip--the wife of a friend ran an enterprise that had unadvertised space to lease.

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