Updated: March 1999

TABLE OF CONTENTS

Part One: Economic Profile
- Macroeconomic indicators
- Ruble/Exchange rate
- Debt/Deficit
- Labor issues
- Economic reform program, Privatization

Part Two: Foreign Trade Profile
- Overall Russian foreign trade
- U.S.-Russia trade summary
- Best prospects for U.S. exports
- Russian regulatory environment for trade
- U.S.-Russia bilateral agreements

Part Three: Foreign Investment
- U.S. and other foreign investment
- Challenges to foreign investment
- Regulations on foreign investment
- Intellectual Property Rights
- U.S.-Russia bilateral agreements

Part Four: Finance and Banking
- Banking profile
- Treasury system
- Foreign bank activity
- Currency regulations
- Financing: U.S. and multilateral programs

Part Five: Practical Information
- Visas
- Medical facilities
- Crime

Part Six: Useful Contacts
- U.S. representatives in the NIS
- NIS representatives in the U.S.
- Trade and other business associations
- Key Russian government leaders

PART ONE: ECONOMIC PROFILE

* Note: Unless otherwise noted, all ruble figures for 1997 are indicated at their pre-redenomination face value. All 1998 and beyond ruble values are presented in accordance with the redenomination value.

Population: 146.5 million (September 1998); 81.5 percent are ethnic Russian; 73.9 percent urban; population of Moscow - approximately 9 million; population of St. Petersburg - 4.8 million.

Territory: 17,075,400 square kilometers/6.6 million square miles. Russia, covering one-eighth of the world's land surface is the largest country in the world. Its territory is almost twice the size of the United States. Russia is divided into 89 administrative regions, including provinces (oblasts and krais), metropolitan cities (Moscow and St. Petersburg), 16 autonomous republics with their own independent governments, 5 autonomous regions, and 10 national regions. The autonomous and national regions have less autonomy than the republics.

Economic Significance: Russia accounted for approximately 60 percent of the GNP of the Soviet Union. The country is well endowed with natural resources and raw materials such as petroleum, diamonds, gold, copper, rare metals, manganese, bauxite, uranium, silver, graphite, and platinum, all of which are a source of hard currency because of worldwide demand. The country ranks as either the largest, or one of the largest, worldwide producers of several of the above commodities and products. Although Russia has been a leading international player in select manufacturing sectors, such as chemicals and military aerospace, the country's manufacturing base is greatly diminished.

Industrial Profile: Russia manufactures approximately 62 percent of all the machinery made in the Newly Independent States of the former Soviet Union (NIS) and nearly 60 percent of the NIS' crude steel (Russia is the world's largest steel producer after Japan). Other key industries are chemicals, timber and wood products, including paper, and non-ferrous metals. Nearly 15 percent of Russia's industries are defense related. The budding trade and services sector makes up an ever larger part of Russia's GDP.

Macroeconomic Indicators

GDP: Both Russia and leading international organizations initially predicted that Russian GDP would grow in 1998. Such growth would have maintained the small economic turnaround that the country officially recorded for 1997 over 1996 after six years of declining production. Although Russia roughly maintained GDP in the first quarter of 1998 compared to the previous year, by July Russian GDP was showing signs of strain, down 4.5 percent over July 1997. August 1998 GDP fell 8.2 percent from August 1997. Initial estimates suggest that Russian GDP declined 5 percent in 1998.

Table 1 indicates annual nominal GDP and real change relative to GDP of the previous year. Russian authorities report that in real terms, Russian GDP is still only at 59 percent of 1990's GDP.

TABLE 1: Change in GDP (1995 - 1998)

Year      Change (real GDP, over previous year)

1998                          -5.0%
1997                          +0.8%
1996                         - 5.0%
1995                         - 4.0%

Industrial production: Free fall' is a term some used to describe industrial output immediately following the breakup of the Soviet Union. According to the Russian State Statistics Committee (Goskomstat), industrial production has fallen 53.8 percent since 1990; larger declines are suggested by other sources. The military-industrial complex, suppliers of goods to the state sector, and light industry have been among the hardest hit. However, depending on world prices and ruble stability, some export-oriented industries have fared relatively well during Russia's transition.

The rate of decline in real industrial output slowed markedly beginning in August 1994. Table 2 shows the year-on-year change in industrial output for 1995-1998.

TABLE 2: Year-on-year Change in Industrial Output (1995 - 1998)

Year    Change in Industrial Output (over previous year)

1998   - 5.7%
1997   +1.9%
1996   - 4.0%
1995   - 3.3%

Russian production levels face monthly and seasonal fluctuations, as well as wide disparities between industry sectors. Secondary indicators of economic activity, such as energy output and freight haulage, suggested a slightly more rosy scenario than that indicated by official statistics through mid-1998. This mystery is somewhat accounted for by the informal, or shadow, economy, as well as by ongoing tremendous tax avoidance by Russia's enterprises, despite efforts to improve tax collection. The Russian Federal Security Service has estimated that the shadow economy may account for as much as 40-50 percent of GDP, compared with less than 10 percent in most developed economies. In early 1999, the State Statistics Committee reported that on average 20 percent of incomes are concealed from the government, with much higher rates in trade and during the summer months, when individuals are harvesting food from their summer homes.

Inflation: Inflation levels in Russia dropped drastically between 1992, when the annual inflation rate reached 2,324 percent, and July 1998, when annualized inflation in Russia dropped to a low of 5-6 percent. The Russian Government was aiming for 5-7 percent inflation in 1998, but the eruption of financial crisis and related developments on and after August 17, 1998 (ruble devaluation, etc.) resulted in a dramatic climb in monthly inflation. Monthly inflation was just 0.2 percent in July 1998, but jumped to 15 percent in August and 38 percent for September, closing at 84 percent for the year. Although monthly inflation rates have subsequently dropped, concerns are high that inflation could jump if Russia resorts to ruble emission as a measure of addressing economic woes. Initial predictions for 1999 suggest inflation of approximately 100 percent if conditions are favorable.

Monthly inflation rates have varied depending the time of year under consideration, with recent years indicating a general pattern of relatively higher levels at the beginning and end of the year but lower rates during the summer months. Although inflation rates are usually reported for Russia as a whole, regional variations do occur. The following chart shows the progression of Russian inflation rates between 1994 and 1999.

Table 3: Russian Inflation: 1994-1999

  Year       January              August     December   Annual Total
  1999          8.5%
  1998          1.5%                0.2%       11.6%        84.4%
  1997          2.3%               -0.1%       1.0%           11%
  1996          4.1%               -0.2%        1.4%        21.8%
  1995         18.0%                4.6%        3.0%         131%
  1994         22.0%                4.0%       18.0%         215%
  

Russia has undertaken a number of different approaches to exchange rate policy over the past few years, including a currency corridor in 1995 and a crawling band mechanism from 1995-1997. For the most part, these measures were viewed as part of an effort to establish a more natural' ruble-to-foreign currency rate and have generally been positively received for their perceived contribution to Russian macroeconomic stability. Falling inflation, slow money supply growth, and the effective functioning of Russia's ruble-dollar mechanisms also contributed to a period of relative ruble stability through early 1998.

Although the ruble maintained relative stability in the first half of 1998, the ruble took a heavy hit in the second half of the year. In January 1998, with the ruble trading at just over 6 to the dollar, Russia replaced the crawling band mechanism with a more freely floating but still semi-managed ruble. The exchange rate policy allowed the ruble to fluctuate within 15 percent around a central exchange rate, which Russia intended to maintain at between 6.1-6.2 rubles to the U.S. dollar in 1998-2000. In July 1998, the ruble was trading at R6.2 to the dollar. On August 17, 1998, Russia widened the band within which the ruble was allowed to fluctuate, resulting in a de facto devaluation of the ruble. In total, the ruble lost 71 percent of its value in 1998, closing the year at R20.65 to the dollar.

Ruble redenomination: On January 1, 1998, Russia redenominated its ruble, introducing new bills with three fewer zeros than pre-1998 rubles. The Russian Government plans to gradually retire the old currency throughout 1998 and 1999. In addition to the redenomination, Russia has re-introduced the kopek, valued at 1/100th of a ruble.

Debt / Deficit

According to the Russian Government, payments to service domestic and foreign debt accounted for nearly 30 percent of federal budget spending in 1998. Among the measures introduced on August 17, 1998, in response to the growing financial crisis, the Russian Government announced a 90-day moratorium on payments of some foreign debt payments. Lacking specific guideline regarding the implementation of the moratorium, banks applied their own interpretation to the measure, with some continuing payments and others stopping them all together.

Foreign Debt: The Russian Government maintains substantial foreign debt. Approximately $100 billion of Russia's foreign debt was inherited from the Soviet Union -- Russia assumed all of the foreign debt of the Soviet Union in exchange for the other NIS countries abrogating any claims to the FSU's foreign assets. The remaining amount of foreign debt has accumulated since the break-up. Russian total foreign debt grew approximately $20 billion between 1996 and 1998, to roughly $144 billion. Of the total debt, approximately two-thirds is principal, while the remaining amount constitutes interest and payment arrears accumulation.

Compared to its debt dating from the Soviet era, Russian entities have minor payment arrears to OECD countries. In June 1996 the Russian Government reached a settlement on rescheduling $38.7 billion in old Russian sovereign debt to Paris Club members, and in October 1997 Russia was admitted to the Paris Club of creditor countries. In December 1997 Russia signed a closing agreement with the London Club for a program to restructure $32 billion of debt over a period of 25 years. According to plan, in 1998 Russia is to pay $17.9 billion in foreign debt service to the Paris and London Clubs.

Resolutions of the outstanding bad debt between Western government and Russian commercial creditors under the Paris and London clubs opened up the possibility of resolving the estimated $7 billion of unsecured debt owed foreign companies, as well as the recovery by 2004 of up to $12 billion from developing countries with debts to Russia.

Budget Deficit: Russia reported a budget deficit of 3.2 percent, or R86.5 billion, for 1998. International estimates of Russia's budget deficit, however, tend to be at least a few percentage points higher than Russian estimates. In 1997, for example, the Russian Government reported a budget deficit of 3.3 percent of GDP, but other sources, such as the IMF, estimated Russia's budget deficit to be closer to 7.7 percent; in 1996 Russia reported a 3 percent deficit, while many other sources estimated the deficit to be 5 percent. One source of the variance is differing methods used to calculate deficit figures--Russian Government methods do not include debt service payments (interest on debt). For 1999, the Russian Government plans a 2.5 percent budget deficit, but this figure is widely believed to be unachievable.

Wage and Pension Arrears: Since his confirmation in September 1998, Prime Minister Primakov has frequently named as a top priority paying arrears to state workers, students, and military personnel. In January 1999, Russia reported total wage arrears of nearly R77 billion, with public-sector wage arrears accounting for R20 billion of the total. Official reports indicate that the Russian Government accounts for only 18 percent of public-sector wage arrears, with local and regional governments responsible for the rest. According to the Ministry of Economy, in November 1998 pension arrears totaled R30 billion, roughly equal to $1.7 billion at the time.

Labor Issues

Wages: Developments in 1998 interrupted growth trends for nominal and real wages in Russia. Russia's financial crisis has had a severe effect on wages in the country. Many employees were helpless as ruble devaluation and price increases eroded the buying power of their salaries. Meanwhile, both foreign and Russian companies, faced with their own challenges stemming from the crisis, have resorted to pay cuts in order to maintain what staff they were able to keep.

The average nominal monthly wage in January 1999 was approximately R1,200 (equivalent to $50-$60). Many estimates place real incomes down 35-40 percent or more from August of 1998. The Russian Government estimated that real personal disposable income fell more than 15 percent in 1998.

The minimum wage is currently R83. In November 1998, the Russian Government established an average monthly subsistence minimum of R642 (approximately $42 according to the exchange rate in effect at the time); 30 percent or more of Russia's population is believed to be living below the subsistence level.

Unemployment: Although the Russian Government has been using International Labor Organization (United Nations) statistical methods for determining unemployment, officially reported unemployment levels in Russia, as with other government statistics, have often been lower than figures determined by the international community . Russia reported several years of very slowly growing unemployment, which temporarily peaked at 9.6 percent in the spring of 1997 before dropping to a low of 9 percent at the end of 1997. During this time, alternative estimates of unemployment suggested a combined unemployment and underemployment rate of between 12 and 15 percent.

In 1998, reported unemployment levels resumed their climb, reaching 12.4 percent (8.96 million people) of the employable population at the end of January 1999, the highest level ever officially reported by Russia. In the wake of Russia's financial crisis, both Russian and foreign companies have resorted to layoffs and salary cuts. In November 1998, when the official unemployment rate was 11.6 percent, the Russian Ministry of Economy predicted that unemployment would grow 70 percent by 2001.

A challenge in determining Russian unemployment is that many of Russia's underemployed have kept their official jobs but have been working reduced hours or have stayed on unpaid leave in order to receive social benefits and also to establish a cover' for tax purposes, that is, to conceal income made in the informal sector.

Economic Reform Program

Doubt continues to rise and fall about the speed at which economic reform will be able to proceed in Russia. A range of economic, political, and other factors have slowed expected reforms over the past several years. Government shuffles, differences between the President's government and the Russian duma, and Yeltsin's periodic sidelining due to health problems are among the factors that are perceived as having slowed economic policy developments in 1998 and 1999. In 1999, Russia is already preparing for the year 2000 presidential elections.

Key elements of President Yeltsin's reform program from early in his presidency have been price liberalization, financial stabilization, and privatization. Yeltsin has cited a number of economic goals and plans in the past couple of years, including: a stronger government role in promoting economic growth, greater transparency in government transactions, and creation of a federal treasury. In his 1998 state-of-the-nation address, Yeltsin named stable economic growth, increasing the inflow of investments, and renewal of industry as top goals, and he spoke in favor of reducing utility costs, investing in new technologies, ensuring that the federal budget is realistic, and getting new tax regulations through parliament. Most of these 1998 goals were not realized.

Tax collection remains a major priority and challenge of the Russian Government -- in 1998 tax collection reached only 78 percent of original target levels for the federal budget; in 1997 the tax collection rate was only 70 percent of targeted levels. According to the Russian State Tax Police, five Russian regions--Moscow City, Moscow Oblast, Khanty-Mansii Autonomous Okrug (4.6 percent), Kemerovo Oblast (4.5 percent), and St. Petersburg City--account for more than 50 percent of Russian tax payments

Price controls have been lifted on almost 90 percent of wholesale and retail goods. Although there are still price controls on certain sectors, such as housing and telephone services, and some prices remain artificially low, increasingly these controls are being lifted. Energy costs, for instance, have risen from between 7 and 10 percent of the world energy market price to 75 percent (wholesale domestic fuel oil only). In March 1997, the Russian Government announced that corporate energy rates would be lowered 13 percent, while consumer rates would be allowed to grow. Tariffs on railroad transportation were lowered in 1998 and are expected to be lowered again in 1999. In the aftermath of the August events, a number of regions established price ceilings for foodstuffs, but enforcing these ceilings has proved difficult.

Multilateral institutions continue to consult with Russia on the country's economic reform measures. An ongoing sticking point between Yeltsin and the IMF has been the Russian budget. The already-approved 1999 federal budget, for example, is based on annual inflation of 30 percent and an exchange rate of R21.5 to the dollar--inflation for the year through February was already 12.6 percent, while the exchange rate as of mid-March was more than R23 to the dollar. Meanwhile, Russia continues to negotiate with the World Trade Organization (WTO) about membership. The first stage of talks was completed in 1997, but Russia must address additional issues -- among them its import tariffs and other market access barriers -- before any final membership is likely.

Privatization: As of January 1994, 75 percent of medium- and large-scale enterprises in Russia and approximately 80 percent of small shops and restaurants (establishments with under 200 employees) had been privatized. Since January 1996, the Russian Government has reported that at least 70 percent of Russian GDP is composed of goods and services accounted for by the private sector. Early 1997 Russian Government figures reported that the private sector accounts for 75 percent of manufacturing enterprises, 85 percent of manufacturing, and more than 80 percent of the Russian workforce.

Russia has moved through four phases of privatization. Phase one of Russian privatization began on October 1, 1992, and involved the distribution of privatization vouchers to every citizen (a voucher was roughly equivalent to the value of six weeks' worth of wages) and the holding of voucher auctions. The second phase of Russian privatization, initiated in July 1994, involved the sale of vouchers of Russian companies for cash and privatization of some of the largest Russian enterprises. The third phase, starting in the second half of 1995, involved the controversial "equity-for-loans auctions." The concept behind this model was to raise long-term loans from major Russian banks in exchange for giving the bankers controlling stakes in the largest Russian enterprises as collateral, together with voting and management rights. Lastly, since late 1995, Russia has been selling shares --primarily to domestic investors--of approximately 136 enterprises considered to be the "crown jewels" of Russian industry and other enterprises.

In 1997, President Yeltsin signed a decree on plans for privatization of Russia's natural monopolies, including power and gas enterprises as well as Russian railroads. Privatization of the natural monopolies continues to be a disputed issue. During 1998 the Russian Government planned to begin the process of selling unused Russian military assets and to offer shares in a number of key companies, including Svyazinvest, Lukoil, Rosneft, and Slavneft. Plans for "accelerated privatization" of these firms were a key component of Russia's anti-crisis package. However, due to failed tenders and financial turmoil that postponed privatization auctions, revenues from privatization in 1998 reached less than 20 percent of the R8 billion initially anticipated.

Land Reform: Russia does not yet have a land code establishing the framework for overall land reform, and progress in this arena has been slow. A decree on land privatization was issued in January 1992, but it was not until October of that year that the first private plots were sold at auction. The Russian Parliament has resisted passing land reform laws, with many duma members intending to significantly restrict the sale of land, especially agricultural land. President Yeltsin's decision to dissolve the existing Russian Parliament in September 1993 was to have cleared the way for progress on the issue.

Yeltsin's decree #1767 on land of October 1993 allowed, on paper, the free sale and purchase of land to Russians as well as to joint-ventures with foreign participation. Fully foreign-owned companies are not allowed to purchase land outright. In practice, however, 49 to 99 year leases are allowed on land abundant in natural resources (e.g., forestry).

Russian legislation is somewhat clearer over the ability of companies to own buildings than it is on allowing buildings' tenants to own the land upon which those buildings rest. In May 1996 the Communist-led duma attempted to enact a land code that included measures prohibiting the sale of privately-held agricultural lands or shares in private farm enterprises (preferential allowances were made for collective farms), but the Federation Council (upper house) vetoed the code. A resolution committee has been negotiating differences over the land code since that time, leaving the Presidential Decree still in effect. In May 1997, Yeltsin signed a land ownership decree for urban real estate (non-agricultural lands) which was designed to make it easier for building owners to buy the land on which their real estate rests. Implementation of this decree is not yet clear.

Russia established the basic foundation for a mortgage system though the above-mentioned Decree 1767, which enabled banks to lend money to farmers. The land/property purchase/sales process has moved slowly because the real estate sector remains undeveloped. The actors that normally play an integral roll in land/home purchasing and sales in the West, i.e., real estate agents, title companies, and law firms, are in their infancy. The lack of a central land registry, which would guarantee title to a land/property purchaser, is another obstacle to the natural development of the real estate sector.

Prior to the crisis, prices for office space in Moscow rivaled and in many cases exceeded prices for similar space in such high-priced markets as Tokyo. By early 1998, real estate prices in Moscow had risen to around $1200 per square meter annually, 1.5 times the rates in Paris and London, twice as high as New York, and four times the prices found in the German market. Following the crisis, however, some real estate prices have fallen by as much as 30 percent.

PART TWO: FOREIGN TRADE

* Note: Unless otherwise noted, all ruble figures for 1997 are indicated at their pre-redenomination face value; all 1998 ruble values are presented in accordance with the redenomination value.

Overall Russian Foreign Trade

The Russian State Statistics Committee reported that the country's trade turnover in 1998 totaled$133.4 billion, including unofficial trade of approximately $16 billion. In contrast, for 1997 the Russian Government reported $155 billion in total trade turnover. The country maintained its trade surplus with the world in 1998; exports, at a reported $72.5 billion, declined 17 percent but imports fell nearly 35 percent, to $44 billion.

Leading Russian Imports and Exports: Leading Russian imports in 1998 included machinery, equipment, and vehicles (accounted for nearly 30 percent of overall imports); meat and food products; medical instruments and pharmaceuticals; sugar; and cigarettes. Fuel and energy exports (natural gas, crude oil, petroleum products) continue to account for nearly one-third of total Russian exports abroad. Machinery/equipment, iron, and aluminum, in that order, were the next most important Russian exports to foreign markets in 1998. Machinery was one of the only leading exports from Russia to experience an export increase in 1998.

US-Russia Trade Summary -- 1998

Russia accounts for more than 75 percent of U.S. exports to and 85 percent of U.S. imports from the Newly Independent States (NIS), but for less than 1 percent of total U.S. foreign trade. According to Russia's Ministry of Trade, the U.S. accounted for 6.2 percent of total Russian foreign trade in 1998 and ranked second after Germany as a leading source of Russian imports for the year. Following the U.S. were Belarus, Ukraine, Italy, and Holland.

Table 4: U.S. Trade with Russia, 1995 - 1998 ($ millions)

                           1995       1996       1997         1998
U.S. Exports              2,826      3,340      3,289         3,585
U.S. Imports              4,035      3,561      4,290         5,734
Total Trade               6,861      6,901      7,579         9,319
Turnover

U.S. Exports to Russia: The dramatic erosion of buying power following events from August 17, 1998, combined with rupture in the country's banking system and other factors, took a major toll on U.S. exports to Russia in the second half of 1998. Nonetheless, total U.S. exports to Russia grew 9 percent in 1998 -- compared to a 5 percent decrease in 1997 -- in large part due to the sale of U.S. aircraft. If U.S. aircraft exports to Russia in 1998 equaled the level in 1997, total U.S. exports to Russia would have declined by more than 20 percent Most major categories of U.S. exports to Russia experienced declines in 1998.

The leading U.S. exports to Russia in 1998, in order of prominence by dollar sales volume, were: aircraft, meat (primarily poultry, but also frozen pork and sausages), machinery (oil and gas field machinery, computers and components), electrical machinery (primarily for telecommunications), and tobacco. Medical equipment, vehicles (passenger cars, off-road trucks), and miscellaneous food products were other strong U.S. exports.

U.S. Imports from Russia: Steel (rolled), platinum, aluminum, uranium, oil, seafood (crab), titanium, and nickel were the most important Russian exports to the U.S. in 1998, with the first four from this list showing significant increases for the year.

Best Prospects for U.S. Exports

After decades of separation from world markets, Russia holds strong potential as a market for many U.S. goods and services. Demand has emerged in waves. First, in the early 1990s came demand for U.S. food products, followed by strong demand for U.S. consumer products. 1995 saw a surge in demand for construction materials, hotel and restaurant equipment, and furniture. Despite the desire by Russian officials and businesses that Russian manufacturing be able to meet local demand for products, Russia continues to import a relatively high percentage of its consumer goods and food products, together with other manufactured goods.

In July 1998, the Department of Commerce's U.S. & Foreign Commercial Service (FCS) identified the following as best prospects for non-agricultural U.S. exports (for more information, see "Country Commercial Guide -- Russian Federation" via BISNIS OnLine):
- Oil and Gas Equipment & Services
- Mining Equipment & Services
- Telecommunications Equipment & Services
- Aircraft and Airport Equipment
- Food Processing and Packaging Equipment
- Medical Equipment
- Pharmaceuticals
- Electric Power Generation Equipment
- Construction Materials
- Autos, Light Trucks, and Buses

Among agricultural products, FCS identified the following as best prospects for export to Russia:
- Meat (red meat and poultry)
- Wine and Beer
- Apples
- Wheat Flour
- Cotton

Russian regulatory environment for U.S.-Russia Trade

U.S. Export Regulations: A small number of products, primarily in the technology area, are subject to U.S. export regulations. Additionally, in 1998 and 1999 exports were banned to a number of Russian organizations suspected of assisting Iran in developing its weapons capabilities . Companies considering exporting to Russia should verify whether the products to be exported are subject to individual export licensing. Information on export regulations can be obtained from the Department of Commerce's Bureau of Export Administration (BXA), tel: 202/482-4811, website: www.bxa.doc.gov.

Russian import regulations and procedures: Although U.S. companies exported more than $3.5 billion worth of goods to Russia in 1998, getting products into the country is not without procedure, and often, complication. In addition to miscellaneous customs processing fees, goods going into Russia are potentially subject to three Russian levies (an import duty/tariff, a Value Added Tax, and an Excise Tax), as well as import licensing. The majority of goods shipped to Russia are also subject to various types of certification, labeling, documentation, and customs requirements. U.S. companies are advised to thoroughly research requirements and procedures for shipping and importing goods into Russia (See the BISNIS publication "Shipping Guide to Russia" for additional details).

Import Licenses: Licences are required to import a number of goods into Russia, including televisions, tobacco products, alcohol, encryption software and others. U.S. exports are advised to ensure that the Russian buyers of their products have any necessary licenses before goods are shipped.

Customs: Customs procedures continue to be revised and must be followed closely by U.S. exporters. Unfortunately, although companies may try to follow the letter of Russian import regulations, receiving authorities often give conflicting accounts of present requirements. One way for U.S. traders to substantially reduce the risk of cargo delays or even seizure by Russian customs is to work closely with experienced U.S. freight forwarders who specialize in getting products into the region.

Importers of goods subject to import duties and excise taxes are obliged to pay these fees at Russian customs entry points. A document called a garantinoe obyzateltsvo (obligatory guarantee of payment), certifying that the importer of the goods will pay applicable levies, may be required by Russian Customs authorities. Often, Russian Customs authorities require supplementary documentation, such as a copy of the contract between the exporter and consignee, before clearing the cargo for inland destinations.

Effective January 1, 1996, the Central Bank of Russia--in an effort to stem the tide of illegitimate trading contracts (and the resulting capital flight from Russia)--instituted a "passport" system. Currently, Russian imports and exports are included in the system. The system requires that a trader's bank issue a "passport" to verify proper receipt and handling of hard currency connected with a specific import contract. The trader has 180 days to document the receipt of the goods (and attendant quality and quantity, as stipulated in the contract and "passport") or return the hard currency issued in payment. Failure to comply with this regulation may result in liability for a hard currency penalty in the amount of the payment.

Import Duties: Russian Customs officials calculate potential levies on imports by compounding the different rates (import duty, excise duty, etc.). The import duty is calculated on the "value of the good established for customs purposes." This customs value could include any applicable shipping and handling terms that may be included in the price of the shipment (e.g., CIF), as well as the stated price of the particular goods. In 1996, the average import tariff was approximately 14 percent.

According to Russian Government resolution No. 808, starting April 12, 1997, Russian individual traders, known as shuttle traders, are required to pay usual commercial tariffs for all baggage weighing over 200 kilograms or worth over $10,000. All baggage up to those figures is subject to the compound tariff for individuals of between 30 percent and 50 percent. Goods imported into Russia via international post are duty-free up to $100 value.

The trend in the Russian Government is increasingly away from special tariff reductions and exemptions. Meanwhile, it is understood that, in practice, many organizations, particularly in Moscow and St. Petersburg, retain preferential tariff treatment. Companies contemplating exporting to Russia and attempting to anticipate special rates on import levies should proceed with extreme caution.

An Excise Tax is levied on most imported goods considered "luxury items," such as cars, jewelry, alcohol, and cigarettes. A new excise tax law went into effect in February 1998, raising rates on many products (25 categories). The current range of excise taxes run between 10 percent and 250 percent. As with other taxes, commodity excise rates are periodically changed. An excise tax, if applicable, is calculated as a percentage of the customs value of the goods.

The Value-Added Tax (VAT) is applied to nearly all goods imported into Russia. As of April 1, 1996, the VAT has been applied at a standard rate of 20 percent. However, some foodstuffs are subject to only a 10 percent VAT tax. In 1997, Russia eliminated VAT exemption for imports of technological equipment (including turbines, furnaces, refrigerators, and some types of food processing machinery), as well as for vehicles to be used for public transportation or special purposes. The VAT is calculated as a percentage of the sum of the good's customs value plus, where applicable, the excise duty. The Russian Government has proposed reducing the VAT from 20 percent to 15 percent in 1999, but this step looks ever more unlikely. VAT collections are a top contributor to the Russian budget.

Certification: Pursuant to Russian Government Order 612 of July 1, 1993 "On the Protection of Consumer Rights," many goods exported to Russia are required to first meet safety, quality, and/or sanitary/veterinary testing or certification requirements. Since 1995, the list of products subject to mandatory certification has expanded. Under 1995 worker safety legislation, all industrial products require certification. Analysis of food products is required at least annually in accordance with requirements by Russia's Ministry of Health.

In order to meet certification requirements, products must be tested/certified through the appropriate authorized organization(s). In some cases (food, oil/gas, mining, and health equipment), a product needs to be certified independently by an authorized Gosstandart (State Committee on Standards and Metrology) office, as well as by the appropriate Ministry or testing lab. This process may prove lengthy, cumbersome, redundant, and costly for some U.S. exporters. Certification costs should be researched and taken into consideration before signing a contract. U.S. exporters of telecommunications equipment have found this testing regime particularly onerous. Several reports on certification issues and details are available from BISNIS.

Labeling requirements: Since late 1996, Russia has been establishing labeling requirements for imported products, particularly food products. A range of information is now required, in Russian, on the labels on imported food products, such as: product name, country of origin, net weight, content, nutrition value, terms and conditions of storage, date of expiration, and shelf life. Although it is not yet clear which body has ultimate responsibility for enforcement, customs agents throughout Russia are requiring adherence to the regulations.

Temporary imports: Temporary imports by foreign companies, such as those sending samples or for display at trade fairs, are subject to a 3 percent (of the combined, normally applicable levies) non-refundable monthly payment to Russian authorities. Companies accredited with the Russian Government are exempt from this temporary import duty if the goods are imported for only one year and are used by the company. As of April 1, 1999, furniture/equipment brought into Russia by a representative office for its use is no longer subject to duty-free temporary import status.

Exporting from Russia: In late 1998 and early 1999, the Russian Government established export tariffs for a number of products. Rates range from 5 - 10 percent. Categories of goods affected include precious metals, seafood, alcohol, timber, and oil/gas. These duties are to be in effect for six months. Also in late 1998, the Central Bank increased to 75 percent the required amount of repatriation of export proceeds.

U.S. - Russian Bilateral Agreements on Trade

Bilateral Trade Agreement: The Bilateral Trade Agreement provides for Most Favored Nation (MFN) status for products from both countries, improved market access, and non-discriminatory treatment for U.S. goods and services in Russia and Russian products in the U.S. The agreement also provides intellectual property rights protection and reaffirms mutual commitments to international agreements.

Generalized System of Preferences (GSP): On October 18, 1993, Russia received GSP status from the United States. GSP accords nonreciprocal tariff preferences to developing nations. Through this decision, 4,400 semifinished and agricultural goods are, as of the effective date, exempted from U.S. import tariffs and customs duties. GSP privileges are reviewed on an annual basis.

PART THREE: FOREIGN INVESTMENT

* Note: Unless otherwise noted, all ruble figures for 1997 are indicated at their pre-redenomination face value; all 1998 ruble values are presented in accordance with the redenomination value.

Estimates of foreign direct investment in Russia vary widely. Official Russian Government estimates of foreign investment include categories for foreign direct investment, portfolio investment, and "other investment," which primarily consists of credits. Preliminary Russian Government estimates report foreign investment of only $2 billion in 1998. Some other (Western) sources estimate higher levels of foreign investment in 1998 than reported by the Russian government, but all sources so far suggest that annual foreign direct investment declined in 1998 over 1997. For 1997 Russia reported that it attracted nearly $3.9 billion in foreign direct investment, a 90 percent increase from the $2.05 billion reported in 1996.

Table 5: Foreign Investment in Russia (1993-1998)

Year      Foreign Direct Investment      Portfolio Investment
1998                $3.36b 
1997                $3.90b                        $3.3b
1996                $2.05b                        $3.2b
1995                $1.50b                        $1.5b
1994                $1.30b                        $2.5b
1993                $1.36b                        $300m     

U.S. and Other Foreign Investment in Russia

In cumulative dollar terms, the U.S. and Germany have been the leading foreign investors in Russia since the break up of the Soviet Union. For the last several years, the U.S. has consistently accounted for roughly 25% of foreign investment into Russia. In March 1998, the Russian Government estimated that the U.S. accounted for nearly 27 percent of all foreign investment in Russia ($2.8 billion) in 1997. Britain, with $2.3 billion in foreign investment (21.9 percent of the total), Switzerland ($1.7 billion, 16 percent of the total), and Germany ($1.5 billion, 14.7 percent of the total) followed. Together, the leading four investors in Russia accounted for nearly 80 percent of total investment in 1997, while the top 10 investors accounted for more than 90 percent. Preliminary reports suggest that the U.S. share of foreign investment may have slipped to less than 20% in 1998.

Foreign Direct Investment: Russia's large domestic market, vast supply of natural resources, skilled and well-educated labor force, and proximity to markets of the other former Soviet republics are features that have already attracted considerable foreign interest, despite the challenges posed to potential investors. While foreign direct investment in Russia has far outpaced foreign direct investment in the other Newly Independent States, the level is still low compared with foreign direct investment in Eastern Europe and other emerging markets. According to some estimates, through 1996 total foreign direct investment in Russia amounted to $47 per capita, compared with more than $300 for neighboring Poland.

About 51 percent of recent foreign investment flows have gone to four sectors: the fuel industry, trade, finance, and the food industry. Any increase in investment in other industry areas is a possible indicator of greater diversification in the economy, and decreased reliance on the extraction of natural resources. Moscow, by far, receives the most foreign investment. Regions surrounding Moscow, such as Tatarstan, Krasnoyarsk, Tatarstan, and Omsk, also have high foreign investment levels.

Foreign Portfolio Investment: Russia's stock market was one of the world's best performing emerging markets in 1997. In particular, the Russian GKO (T-bill) market attracted the attention of both foreign and domestic investors. From 1996, Russia made it possible for nonresidents to convert earnings on the Russian T-bill market through special bank accounts and using forward contracts or options. Yields on GKOs climbed as high as 300 percent in 1996, and then settled to 30-35 percent annually in 1998 before the market was frozen in August 1998.

Nonresidents accounted for less than 10 percent of the Russian T-bill market in mid-1996, but held roughly one-third of the $40 billion GKO market prior to the moratorium established in August 1998. Foreign investors have voiced dissatisfaction at the Russian government's proposed plan for restructuring GKO debt. In exchange for existing GKO holdings, the plan offers 10 percent in cash (rubles) up front, 20 percent in 3-year non-interest bearing bonds, and 70 percent in four- and five-year bonds with a variable coupon. Although more than 70 percent of Russian investors had exchanged their GKO holdings by mid-March 1999, only a small percentage of foreign debtholders have done so.

Structural limitations to the amount of foreign ownership in individual enterprises vary greatly, with some offering 1 or 2 percent blocks of shares and other firms opening all ownership to foreign hands. The success of Russian enterprises in seeking American Depositary Receipts and other Western capital sources has been eagerly observed by many Russian entities, including both privately-held and partially state-owned entities.

Challenges to Foreign Investment

Foreign investors face a number of challenges and deterrents in Russia; some of the most commonly cited problems include taxes, corruption, an ever-changing regulatory environment that lacks transparency, the country's labyrinth of government bureaucracies, weak shareholders' rights, and weak contract law. Russia's overall legal framework is still evolving -- laws and tariffs frequently change. Difficulty in obtaining financing has frustrated a good many business efforts, and the recent rupture in the banking system has exacerbated payment and financing problems. Despite these challenges, Russia reports that more than 9,000 foreign companies have registered offices in Russia. Meanwhile, despite the additional challenges that have arisen since the August 1998 crisis, many foreign companies have voiced their intentions to remain in Russia.

Regulations on Foreign Investment

In an effort to stimulate foreign investment, the Russian Government has undertaken legal and economic reforms, as well as other measures. The USSR Law on Foreign Investment of July 1991, still valid today, permits 100 percent foreign ownership of businesses and guarantees foreign investors rights equal to those permitted Russian investors. The first major revision of this Soviet-period law awaits action by the Russian Duma; there are concerns that the new law would impose additional restrictions and create worse conditions for foreign investment.

Russia's push to develop and support its domestic suppliers is often at odds with the goal of establishing measures to attract foreign investment. A number of restrictions are in place or proposed for regulating foreign investment in certain industries (insurance, finance, natural monopolies) and activities (alcohol production, tourism). Foreign investors may need concessions to use land, natural resources, and other property.

The passage in December 1998 of the long-awaited production sharing agreement law and enabling legislation paved the way for increased foreign investment in the oil and gas industry.

Forms of Business Representation Allowed: Foreign operations can be either accredited or registered in Russia. An accredited (representative) office can facilitate foreign trade and contracts by distributing marketing materials, establishing local contacts, and showing sample products, but cannot engage in financial transactions. Also the representative office's Russian bank accounts can be used only for operational activities. Accreditation is not the same as establishing a company. An accredited office is not a Russian legal entity and is usually not open for more than 3 years. Accreditation is accomplished through the Russian Chamber of Commerce and Industry.

Establishing a company with foreign capital requires registration. Examples of registered entities include a Russian subsidiary of a foreign company or a branch office, both of which may generate their own resources and are subject to Russian accounting and tax-reporting requirements.

Registration: Registering a business in Russia can be a lengthy and cumbersome process, requiring approval from several layers of local and federal authorities, especially when the business activity involves mineral resources or infrastructure. U.S. companies are advised to seek qualified professional assistance with registration.

A July 8, 1994 presidential decree streamlined the process of business registration in Russia. The decree requires businesses to make an official application, submitting, either in person or by mail, the following: 1) the company's foundation documents; 2) documents of corporatization (notarized by a notary public); 3) a receipt of fee paid to the Russian Government; and 4) proof that more than 50 percent of the company's charter capital has been paid. The decree allegedly imposes a requirement that registration be completed within 3 days of receipt of the application and supporting documentation. Further, the Decree sets a minimum capital requirement for joint-stock companies and joint ventures of 1,000 times the current minimum wage (R75,900 or approx. $17 as of Feb. 1, 1996). Other enterprises must have minimum capital of 100 times the minimum wage. According to the Decree, companies whose start-up capital is R500 million or more must register with the Anti-Monopoly Committee. Banks/financial institutions have separate requirements (see Part Four: Banking and Finance).

The following is a sampling of investments that face restrictions or require registration through the Ministry of Finance in Moscow, and possibly with other agencies as well:
- investments over R50 million,
- companies with charter capital greater than R100 million or with foreign participation exceeding 50 percent,
- investments for natural resource exploitation, and
- investment in defense, insurance, or telecommunications enterprises.

Taxes: Russian taxes, both in terms of the number of taxes and the amount taxed, are generally cited by U.S. companies as the leading challenge to doing business in the country. The Russian taxation system also lacks the transparency that would make it easy for companies to be fully informed and compliant. Meanwhile, the Russian Government continues to try to increase tax revenues from businesses operating in the country, including foreign companies; success at tax collection is among the issues under evaluation in the consideration for granting Russia accession to the World Trade Organization.

Although the Russian Government predicted completion of a new tax code by the end of 1998, only Part 1 of the currently three-part tax code, which addresses the roles of the state and taxpayers, went into effect on January 1, 1999 (for a summary of Part 1, see "Russia's New Tax Code, Part One" by the U.S. & Foreign Commercial Service, via BISNIS OnLine). Parts 2 and 3 of the tax code will provide information about concrete taxes and payment procedures. Two benefits widely desired in the final tax code are a simplification and reduction in the total number of taxes paid and an expansion of the number of business expenses that are deductible (marketing, advertising, etc.).

Several different types of taxes are pertinent to U.S. business activity in Russia.

The Russian corporate profit tax generally is 35 percent, although it can go as high as 43 percent for some activities (banking). Since 1996, this tax consists of a 13 percent Federation tax and a regional tax of up to 22 percent (up to 30 percent in the case of banks and insurance companies). The latter rate can be a subject for negotiation between the particular company and the appropriate Russian regional authorities. A Russian law to reduce the corporate profits tax rate to 30 percent has been slowly moving through the Russian Duma.

Russia has instituted a two-year federal tax holiday for small businesses (Russian authorities define a small business as one which has less than 200 employees) operating in certain lines of business, including the production of consumer goods and construction of residential, industrial, and public works projects. Other tax measures to support small business have also been under consideration. Russia has also instituted, at least on paper, a range of profit tax holidays (from federal taxes only) for Russian-foreign joint ventures, particularly those engaged in joint production activities. Some regions are also offering tax holidays to specific types of foreign-Russian joint ventures.

In January 1996, Coopers and Lybrand reported that the new Russian Profits Law, effective January 1, 1996, included profit tax exemptions for the following circumstances: 1) some transactions between parent and subsidiaries; 2) donations by foreign states or organizations, especially culture, education, and science; 3) investment received by private companies as a result of investment tenders; and 4) funds transferred within a company for the development of infrastructure.

Personal income taxes: In December 1997, the Russian Government approved a new income tax schedule. On earnings up to R20,000 ($3,400), the income tax rate is 12 percent. A rate of 26 percent will be applied to earnings between R20,000 and R100,000 . Russia's top earners (incomes above R100,000) pay R20,400 on the first 100,000 rubles and 35 percent on the remaining income.

Other taxes: Companies may expect to pay a variety of other taxes, depending upon the geographic location, legal structure, and sector of planned activity. Examples of additional federal taxes include a road-usage tax, an assets tax, a tax on securities firms, and a tax on the name "Russia." Examples of supplementary regional taxes include: a tax (for industrial enterprises) on water resource utilization, a property tax, and a forest tax. Companies may also be faced with taxes levied by local administrative bodies. Examples of such taxes include: an advertising tax, an education tax, and a land tax.

Profits: Russia's ruble is the only legal tender in the country. All sales made in the country must be made in rubles. After exchange regulations are satisfied and taxes are paid, profits may be converted and repatriated.

Free Economic Zones: Free Economic Zones are areas intended to be especially conducive to both foreign investors and foreign exporters/importers through reduced or eliminated tariffs (on exports and imports), VAT rates, corporate tax burden, and regulations and paperwork. Although nearly 25 regions and "customs areas" have either declared themselves or been declared "Free Economic Zones," these areas have largely foundered because neither the broadly encompassing and supporting legislation approving benefits, nor specific rulings authorizing an isolated free economic zone have been approved by the Russian government. Limited exceptions include first Kaliningrad and to a lesser degree, Nakhodka. Specific requirements must be met to take advantage of FEZ benefits. For more information on FEZs in Russia, see the BISNIS home page: www.mac.doc.gov/bisnis).

Accounting: Although some of Russia's largest companies have been audited by international accounting firms according to international standards, Russia has not yet adopted international accounting methodologies. As a result, most foreign companies must maintain at least two sets of accounting records, one each to conform with Russian and also their home-country income/tax reporting requirements. The Russian Government has taken steps toward reform, however, including establishing an International Center for Accounting Reform (ICAR). ICAR is expected to facilitate Russia's transition to international accounting standards. (For more information, see BISNIS Bulletin, February 1999.)

Nationalization and Dispute Settlement: Russian law prohibits nationalization of foreign investments except where deemed to be in the best interests of the country. Disputes are to be settled by national courts or, when an international treaty is in force, by international tribunals.

Intellectual Property Rights

Although the Russian Government has successfully passed laws on the protection of intellectual property and is a signatory to many bilateral IPR conventions, enforcement of laws and regulations remains poor and the country has not been able to stem the high rate of IPR-related infringements. Russian authorities have undertaken a comprehensive revision of the Russian criminal and civil codes, including sections pertaining to intellectual property rights which address measures for strengthened penalties, the establishment of specialized courts, particularly a patent court with trained and experienced judges and attorneys, and trained police and customs officers. Until these measures are forcefully implemented, however, widespread marketing of pirated U.S. (and other) video-cassettes, recordings, books, computer software, clothes and toys is likely to continue. Losses to manufacturers, authors and others are estimated to be in the hundreds of millions of dollars. Russian IPR protection is another issue under discussion in connection with Russia's application for membership in the World Trade Organization.

U.S. - Russian Commercial Agreements Concerning Investment

The Bilateral Investment Treaty (BIT): The BIT guarantees non-discriminatory treatment for U.S. investments and operations in Russia, hard currency repatriation rights, expropriation compensation, and the right to third party international arbitration in the event of a dispute between a U.S. company and the Russian Government. The BIT has been signed and ratified by the U.S. but awaits ratification by the Russian Duma. Questions regarding the Treaty should be addressed to Conrad Oullatte with the Internal Revenue Service at (202) 622-0406.

Treaty for the Avoidance of Double Taxation of Income: This treaty clarifies tax treatment for investors and, in many cases, reduces or eliminates tax liability at source thus supporting greater investment. Dividends are subject to a maximum tax rate of 10 percent at source. The treaty provides relief from double taxation, assurances of non-discriminatory tax treatment, cooperation between U.S. and Russian tax officials, and the exchange of tax information. The Treaty is in effect as of January 1, 1994.

PART FOUR: BANKING AND FINANCE

* Note: In January 1998 Russia redenominated the ruble, introducing new notes with three fewer zeros than pre-1998 rubles. Unless otherwise noted, all ruble figures for 1997 are indicated at their pre-redenomination face value; all 1998 ruble values are presented in accordance with the redenomination value.

Banking Profile

Banking activities are regulated by the Central Bank of Russia (CBR). Following a dramatic expansion in the number of commercial banks, which reached a peak of 2,600 in the mid 1990s, the number of these banks began to thin as a result of competition and the more stringent capital reserve and other requirements imposed by the CBR. The Central Bank revoked 316 commercial bank licenses in 1997, and a total of 286 in 1996. Some banks, however, have continued to operate without a license. As of early 1998, the Association of Russian Banks reported that there were just under 1,700 banks in Russia.

According to Russian Government officials, prior to August 17, 1998, Russia's 200 largest banks held 85 percent of bank assets. Although in 1997 former Prime Minister Chernomyrdin stated that more than 50 percent of Russia's banks were sound, in Western circles only 20-30 of Russian banks have been considered reliable.

Russian business newspapers periodically carry ratings naming the "top" banks in Russia, but these rankings are often based on the volume of assets only. In reading bank ratings, observers should consider which banks are, on a recurring basis, ranked as superior performers.

Trends in Russian Banking Prior to August 17, 1998: Prior to the August crisis, the services provided by Russia's new commercial banks had been gradually improving. The time required for domestic cash settlements, which once took as long as two months to finalize and, in some cases, were lost' or inexplicably and severely delayed, had declined to just a few days or even overnight.

A wide variety of Russian banks have established correspondent banking relationships with reliable foreign financial institutions. Many Russian banks have become members of the SWIFT international clearing and funds-transfer system. A number of Russian banks have been researching how they might open branch offices of their institutions in the United States, Europe, and Asia.

A reliable inter-bank clearing system does not currently exist partly because of the inadequate Russian telecommunications infrastructure and lack of a fully developed regulatory framework.

Russia does not yet have an equivalent to the U.S. Federal Deposit Insurance Corporation (FDIC), but one is being planned. Russian authorities have worked swiftly to increase the statutory minimum capital requirements for new banks. The Central Bank has established an "Early Warning System" to monitor bank livelihood in Russia. This system monitors the large Russian banks on a daily basis, and reviews other banks monthly.

Credit cards have increasingly been used as a means of payment in Russia. As of August 1998, about 300 banks in Russia were licensed to deal with foreign currency accounts, 150 of which had licenses to perform a full range of banking services with foreign currency in both domestic and foreign markets.

Developments Since August 17, 1998: Russia's financial crisis had paralyzing results for the country's weakened banking system. Many bank activities were frozen from August 17, including as a result of the 90-day debt moratorium, although some of Russia's more creative' banks continued to operate, including making payments to customers and abroad. Many of Russia's top 20 banks had substantial assets tied up in Russian GKOs, which were also frozen on August 17. The combined effect of the August 17 and subsequent developments was to freeze the activities of even some of Russia's previously most trustworthy banks. Many banks also froze the accounts of its depositors and ceased making repayments on debt.

Some banks considered reliable prior to the August crisis proved to be unstable during and after the crisis, while some lesser known banks were able to continue their operations. A number of medium-sized and regional banks, which previously were not considered top banks but which did not have significant assets tied up in GKOs, have emerged as relative strongholds in the Russian banking system.

Progress on bank restructuring since the August crisis has been very slow. The first government plan to revitalize the banking system was offered in mid-October 1998. The focus of the October plan included separating banks into four groups--reasonably solid banks, banks illiquid because of the financial crisis, banks illiquid because of their own lending/management practices, and "system-forming" banks that are too important to let fail. Russia has also begun work to establish the Agency on Restructuring Lending Institutions (ARKO), which will be headed by Central Bank Chairman Viktor Geraschenko, who served as Central Bank head through the early 1990s.

Bank Deposits: Overall retail deposits in Russia have increased in the past couple of years, even with inflation factored into consideration. As of October 1997, the amount of private deposits stood at roughly R142 trillion. Russia's Sberbank, the government-regulated national savings bank, accounted for roughly 75 percent of all private savings in Russian banks as of July 1997, up from 68 percent at the beginning of 1996.

An immediate effect of the August financial crisis was a rush on banks by depositors hoping to remove cash from their bank accounts. This rush was heightened as depositors discovered that ATM machines were not distributing cash on debit cards, and that many banks were limiting account withdrawals. As a result, many depositors, at the encouragement of the Central Bank, have transferred their deposits to Sberbank, increasing Sberbank's percentage of overall Russian deposits held.

Capital/Reserve Requirements: The Central Bank has periodically raised minimum capital and reserve requirements for financial institutions. In January 1997, the Central Bank raised minimum capital requirements to R20.7 billion for Russian banks and banks with up to 50 percent foreign capital. Minimum capital requirements are higher for banks that desire a foreign exchange license-- R34.5 billion -- and the Central Bank also requires that at least one of the foreign founders contribute at least R11.4 billion to charter capital. Effective at the beginning of 1998, new banks were required to have charter capital of ECU 4 million (Russia is adapting to the introduction of the Euro and currently lists a daily exchange rate with the Euro). In November 1998, Russia postponed to January 1, 2000 the deadline for all banks to meet a minimum capital requirement of ECU 1 million. In an attempt to improve bank liquidity following the crisis, the CBR has lowered reserve requirements for commercial banks to 5 percent of liabilities.

Refinancing Rate: In 1996, Russia's Central Bank began making reductions in its annual refinancing rate, the rate at which it lends to banks. In early 1996 the rate was 160 percent. By late Fall 1997, Russia's refinancing rate had dropped to 21 percent. These reductions marked the Central Bank's efforts to bring the refinancing rate closer to the interest rate on the market for interbank credits. Shock waves from the Asian financial crisis, combined with Russia's own challenges, led to a series of increases in the refinancing rate, which temporarily peaked at 150 percent annually in late May 1998. Less than a month later, the rate was lowered to 60 percent.

Russian Treasury System

Until recently, Russia used a system of "authorized" commercial banks to service federal budget activity. In April 1997, the Russian Government announced that it would be switching to a federal treasury system. The branch network for this system, however, is currently insufficiently developed to handle all Russian Government needs. Since the treasury system will not be able to work with cash, commercial banks will maintain some role in certain parts of federal budget transactions.

Foreign Bank Activity

Foreign banks face a number of restrictions on operating in Russia. The Russian Government has established a ceiling of 12 percent on the total allowed share of foreign capital in the charter capital of the Russian banking system; currently foreign banks contribute just over 4 percent to the charter capital of Russian banks. Additionally, foreign banks are allowed to establish one office but no direct branch operations in Russia. As of mid-1998, there were more than 150 banks in Russia with foreign capital.

The first foreign bank to obtain a license to operate in Russia, Bank Austria, received an "offshore license" in late 1992. Since then, more than a dozen other Western banks have received licenses to operate in Russia. A number of foreign banks, including ABN Amro (Netherlands), Chase Manhattan, Citibank, Credit Lyonnais (France), CS First Boston, Dialog Bank, Dresdner Bank (Germany), ING Barings (Netherlands), and Republic National Bank of New York have received a general license allowing them to accept deposits and make loans to both Russian and foreign clients with minimal formal limitations. With the exception of Republic National Bank of New York, all of the above banks have also been granted a retail bank license.

The following U.S. banks are frequently mentioned as having established a large number of correspondent relationships with Russian banks: Norwest Bank, Citicorp/Citibank, Chase Manhattan, BankAmerica Corporation, Bankers Trust, and Republic National Bank of New York.
Although many foreign banks in Russia have faced losses as a result of developments since August 17, including frozen investments in Russian Treasury Bills (GKOs), as Russia discusses how to revive its troubled banking system foreign banks may find new opportunities in Russia.

Currency Regulations

In a major step toward monetary reform, the Russian Government unified the dollar-ruble exchange rate in July 1992. This established one uniform exchange rate in line with the rate set at the Moscow Interbank Currency Exchange (MICEX) auction. Currency legislation impacts monetary transactions and banking issues for foreign companies in Russia, and US companies seeking to establish a presence are advised to become familiar with banking and currency issues in Russia.

The Moscow Interbank Currency Exchange (MICEX) is the largest currency exchange in Russia, both in terms of volume of currency traded and number of member financial institutions (approximately 100). Five weekly trading sessions occur on the MICEX. The Central Bank of Russia utilizes the rates determined by trading to set its ruble exchange rate. Currency exchanges are also active in St. Petersburg, Omsk, Yekaterinburg, Novosibirsk, Vladivostok, and a number of other cities in Russia. Trading sessions in hard currency contracts also take place on the Moscow Central Stock and Currency Exchange.

Residents (including Russian citizens and firms) may have foreign currency accounts at authorized Russian banks. Russian entities are required to have a special license from the Central Bank to maintain foreign currency accounts outside of Russia, and foreign currency may be purchased and sold in Russia only through banks authorized by the Central Bank.

Financing: U.S. and Multilateral Programs

For additional information on these and other resources, see the BISNIS document Sources of Finance for Trade and Investment in the NIS.

U.S. Department of Agriculture (USDA) (www.agmoscow.post.ru/english.htm): USDA provides export credit guarantee programs to maintain U.S. presence in Russia; the primary program is GSM-102. GSM-102 medium-term (90 days to 3 years) programs operate using private Russian banks and provide guarantees for the sale of a variety of commodities, including high-value products, as well as providing coverage for freight. The commodity must be 100 percent U.S. origin. The USDA Commodity Credit Corporation is only the guarantor and does not directly finance the export of the commodities. CCC typically insures up to 98 percent of the principal and a portion of the interest. Its programs provide variable interest rate coverage, based on a percentage of the average investment rate of the 52-week Treasury bill.

U.S. Trade & Development Agency (www.tda.gov): TDA's primary activity in Russia is to provide funds for U.S. firms to carry out feasibility studies, consultancies, and other planning services related to major public and private infrastructure and industrial projects. All projects must be identified as a priority by the host country. TDA seeks to support activities that have already identified financing for the project's implementation. Potential for U.S. exports during project implementation should be significant. (In the NIS, TDA will only consider projects with potential U.S. exports of at least $10-15 million.) In most cases TDA only partially covers the cost of the feasibility study -- the remainder of the cost must be borne by the U.S. company carrying out the study.

Export-Import Bank of the U.S. (Ex-Im Bank) (www.exim.gov): Ex-Im Bank provides four types of financing for Russia: 1) financing requiring a sovereign guarantee; 2) project finance; 3) financing through framework agreements with Russian entities, such as Gazprom and Roslesprom, for sales to Russia of U.S. production equipment and services; and 4) financing through approved commercial banks. Ex-Im is looking at projects on a case-by-case basis.

Overseas Private Investment Corporation (www.opic.gov): OPIC, established in 1971, has four basic programs: 1) financing of investments through direct loans and loan guarantees; 2) insuring investments against a broad range of political risks--this includes insurance against currency inconvertibility; 3) providing a variety of investor services; and 4) assisting with project development. All of these programs are designed to reduce the perceived risk and stumbling blocks associated with overseas investment. OPIC now has bilateral agreements with all of the Newly Independent States that provide for subrogation of rights, clearances of proposed OPIC transactions, and similar operational features.

OPIC loan guarantees, which provide a 100-percent guarantee for medium- and long-term financing projects involving U.S. lending institutions, are best suited to projects worth over $10 million. Direct loans, meant for small and medium-sized businesses, range from $2 to $10 million; OPIC will participate in up to 50 percent of the project cost for a new venture, or 75 percent for an expansion. The U.S. company must cover at least 25 percent of the equity in the project, or 10 percent of the total project cost. In addition, OPIC has special insurance for financial institutions (including those leasing to private sector entities), firms working in natural resources exploitation, contractors, and exporters.

World Bank (www.worldbank.org): Russia became a member of the World Bank in 1992. Since then, the World Bank has become Russia's largest single foreign source of long-term financing for public sector investments. As of late 1998, the bank had approved more than $11.29 billion in loans for Russia. Loans have supported the oil industry, agricultural and land reform, mining, protection of the environment, social protection, infrastructure development, including transportation, the banking sector and capital markets development, health care, water, and the coal industry. Projects approved in 1997 include $28.6 million for social protection (technical assistance, training, and equipment provision), $800 million to support the Russian Government's structural reform program, and $800 million for the country's coal sector restructuring program. Russia currently seeks to complete an agreement with the World Bank in order to receive a third structural adjustment loan worth over $1 billion.

International Finance Corporation (IFC) (www.ifc.org): In April 1993, Russia joined the IFC, becoming its sixth largest member. IFC, an affiliate of the World Bank, has been instrumental in privatization efforts in Russia starting with its activities in Nizhny Novgorod. In 1993, IFC assisted in the privatization of medium-to-large enterprises. By becoming a member of the IFC, Russia became eligible, in December 1992, for IFC direct investment in private enterprises. The IFC primarily works with projects that have an overall value exceeding $25 million. The largest amount IFC will invest is around $100 million.

International Monetary Fund (IMF) (www.imf.org): The IMF does not provide financing directly to business projects in Russia but the organization has been a contributor to the country's efforts at economic and financial stabilization. Russia became a member of the IMF on June 1, 1992. In July 1992, the IMF approved a credit tranche of $1 billion for Russia for economic stabilization. Early in 1996, the IMF agreed to a three-year loan totaling over $10 billion, to be delivered in quarterly tranches. As of July 1998, Russia was the IMF's biggest borrower, owing nearly $19 billion. The IMF has delayed a number of payments because of Russia's low tax collection revenues and other problems. In 1998 and 1999 Russia has unsuccessfully sought to reach agreement with the IMF on foreign debt and economic issues so that the IMF will resume its financing to Russia.

European Bank for Reconstruction and Development (EBRD) (www.ebrd.com): EBRD provides technical cooperation, loans and equity investments, and debt guarantees for Russia. The institution combines merchant banking and development banking to help restructure the public and private sectors in the NIS. The United States is the Bank's largest shareholder, with a 10 percent voting share.

The EBRD has spent close to $3 billion in the NIS. EBRD's charter mandates that a minimum of 60 percent of its loans contribute to the privatization of state-owned enterprises. The remaining 40 percent may be used to fund public infrastructure or environmental projects that promote private sector development. For private sector projects, EBRD will typically finance up to 35 percent of the project cost and will lend no less than $7 million for any single project. To support smaller projects, the EBRD has helped create numerous debt and equity investment funds.

EBRD supports projects that help develop the private sector, foster privatization, increase direct foreign investment, create and strengthen financial institutions, restructure the industrial base, build a modern infrastructure, promote small and medium sized businesses, and improve the environment. EBRD is focusing its activities in Russia on the following sectors: telecommunications, energy, and infrastructure (including transportation services, roads, and sewerage). The distribution of goods and services, the banking system, and associated financial services (transfers, credit cards, and checks) are also key priorities of the bank.

PART FIVE: PRACTICAL INFORMATION FOR TRAVELERS

Although Moscow and St. Petersburg have comparatively well-developed tourist facilities, tourist facilities in general are not highly developed and many of the goods and services taken for granted in other countries are not available in many cities. Internal travel, especially by air, can be erratic and may be disrupted by fuel shortages, overcrowding, and other problems.

Entry/Visa Information: A passport and a Russian visa are required to travel in or transit through Russia. Without a visa, travelers cannot register at hotels and may be required to leave the country immediately via the route by which they entered, at the cost of the traveler. A visa must be obtained before leaving the United States.

Business travelers must have a letter of invitation from an authorized organization ("sponsor") to obtain a visa. U.S. embassies and consulates can not act as a sponsor.

Visas require designated arrival and departure dates -- travel must occur on or within these dates (you are not permitted to arrive before or leave after the dates on your visa). Although requirements are reportedly changing to make it unnecessary for a visa to contain the entry city and all points of travel, enforcement of this new regulation is inconsistent. Particularly if arriving/traveling in the Russian Far East or outside of Moscow, travelers are advised to include all points of entry/travel on their visa application (and verify that these cities are included on their visa) to avoid complications.

For current information on tourist or business visa requirements, U.S. citizens can contact the Russian Embassy, Consular Division, at telephone (202) 939-8907, -8911, -8913, -8918 or the Russian Consulates in New York, San Francisco or Seattle (see Contact Information). Visa information is also available via the Internet at: www.russianembassy.org.

Visa Registration in Russia: Travelers must have their visa registered with the local OVIR office in each city. In most cases, the hotel will do this automatically. Otherwise, the traveler should request that this be done by their sponsor or the hotel. It is recommended that travelers carry their original or at minimum a photocopy of their passport and visa with them at all times. It is also recommended that additional copies of passport and visa be kept in a safe place in case of loss or theft.

Medical Facilities: Medical care in Russia is limited and often far below Western standards. There is a severe shortage of basic medical supplies, including disposable needles, anesthetics, and antibiotics. Elderly travelers and those with existing health problems may be at risk due to inadequate medical facilities. Doctors and hospitals often expect immediate cash/dollar payment for health services at Western rates. U.S. medical insurance is not always valid outside the United States. Travelers have found that, in some cases, supplemental medical insurance with specific overseas coverage is useful. Travelers should be certain that all immunizations are up-to-date, especially for diphtheria and typhoid. Only boiled or bottled water should be drunk throughout Russia. Further information on health matters can be obtained from the Centers for Disease Control's International Travelers' Hotline, telephone: (404) 332-4559, or via the Internet: www.cdc.gov. The U.S. Embassy and Consulates maintain lists of English-speaking physicians in their area.

Areas of Instability: The political situation remains extremely unsettled in Russia's north Caucasus area, which is located in southern Russia along its border with Georgia. The regions of Chechnya, the Ingush Republic, and the North Ossetian Republic have experienced armed violence and remain dangerous due to continued tension.

Security in Moscow has been tightened, particularly in the metro (subway) system and at government facilities. Gatherings and demonstrations occur frequently in Russia, particularly in Moscow; travelers should exercise caution in areas where large groups have gathered.

Crime Information: Crime against foreigners in Russia continues to be a problem, especially in major cities. Pickpocketing, assaults, and robberies occur both day and night, on city streets, in underground walkways and the subway, on overnight trains, in train stations and airports, at markets, tourist attractions, and restaurants, and in hotel rooms and residences, even when locked or occupied. Members of religious and missionary groups have been robbed by people pretending to be interested in their beliefs. Groups of children are known to assault and rob foreigners on city streets or underground walkways. Foreigners who have been drinking alcohol are especially vulnerable to assault and robbery in or around night clubs or bars, or on their way home. Robberies may occur in taxis shared with strangers. Traffic police sometimes stop motorists to extract cash "fines" and bandits prey on travelers on the highway between St. Petersburg and Vyborg. Travelers have found it safer to travel in groups organized by reputable tour agencies as solo travelers are more vulnerable to criminals. The US Embassy in Moscow offers the following advice:

• Try to keep a low profile. Travelers should "dress down," avoid loud conversation, expensive jewelry, luxury cars, and anything else that calls attention.
  
• Americans should exercise particular caution in airports, open markets, near major train and metro stations, and when hailing taxis (be wary of riding in unmarked taxis).
  
• U.S. firms are encouraged to consult with consider hiring reputable security services.
  
• Do not break Russian laws. Avoid drugs, sleazy business partners, and criminals.
  
• Do not give or take bribes.
  
• Don't pay off the Mafia. If worried about safety, hire a reputable security service.
  
• Carry a copy of your passport at all times. Keep copies of your passport in your room.
  
• Carry U.S. Embassy and other emergency phone numbers with you at all times.

Extortion and corruption are common in Russia's business environment. According to press reports, the most corrupt agencies include the State Customs Committee, the Tax Police, the State Property Committee, the Central Bank, and the Ministries of Defense, Interior, and Agriculture. Organized criminal groups target foreign businesses in many Russian cities and reportedly demand protection money under threat of serious violence. Many western companies have hired security services that have improved their overall security, but security services are no guarantee. U.S. citizens are encouraged to report all extortion attempts to the Russian authorities and to consular officials at the nearest U.S. embassy or consulate.

The Department of State prepares travel advisories and other reports, which are available via the Internet at travel.state.gov, or by calling 202/647-5225 (to hear recorded information using a touch tone phone) or 202/647-3000 (to connect to their automated fax system).

PART SIX: USEFUL CONTACTS & ADDRESSES FOR RUSSIA

US EMBASSIES AND CONSULATES IN RUSSIA

U.S. Embassy - Moscow (EST plus 7 hours)
Location:Ulitsa Chaikovskovo 19/21/23, Moscow, Russia
Tel:+7-095-252-2450
Fax:+7-095-255-9965
Website:www.usia.gov/abtusia/posts/RS1/wwwhmain.html

MailingAmerican Embassy Moscow
Address:APO AE 09721

Official:Ambassador: The Honorable James Collins

U.S. & Foreign Commercial Service (FCS) - Moscow
Location:ul. B. Molchanovka 23/38, 2nd entrance, Moscow 121019, Russia
Tel:local: +7-095-737-5030, -5031, -5032; satellite: +7-502-224-1105
Fax:local: +7-095-737-5033; satellite: +7-502-224-1106
Telex:413205 USCO SU
E-mail:omoscow@doc.gov
Website:198.80.36.136/abtusia/posts/RS1/wwwhfcs.html

MailingUS Embassy MOSCOW - FCS
Address:PSC 77 - FCS
APO AE 09721

Officials:Commercial Attache: Edgar Fulton
Deputy Sr. Commercial Officer: Beryl Blecher
Commercial Officers: Valerie Buss, Matthew Edwards, Dave Knuti
BISNIS Representatives: Olga Ananina, Yevgeny Schukin

U.S. Consulate - St. Petersburg (EST plus 8 hours)
Location:Ulitsa Furshtadtskaya, 15, St. Petersburg 191028, Russia
Tel:+7-812-275-1701
Fax:local: +7-812-110-7022; satellite: 011-873-850-1473
Website:http://www.usia.gov/posts/stpetersburg.html

MailingAmerican Consulate St. Petersburg
Address:Box L
APO AE 09723

Official:Consul General: The Honorable Tatiana Gfoeller

U.S. & Foreign Commercial Service (FCS) - St. Petersburg
Location:57 Bolshaya Morskaya Street (formerly Hertzen Street)
St. Petersburg, RUSSIA25 Nevsky Prospect, St Petersburg 191186 Russia
Local Tel: (812) 326-2560
Local Fax: (812) 326-2561, -2562. 57 Bolshaya Morskaya Street (formerly Hertzen Street)
190000 St. Petersburg, Russia

Intl Tel: +7-812-850-1902
Intl Fax: +7-812-850-1903
Local Tel: +7-812-110-6727
Local Fax: +7-812-110-6479
Sat. Tel/Fax: +7-812-325-6045


Website:www.usia.gov/posts/stpetersburg.html

Mailing:American Consulate St. Petersburg - FCS
AddressPSC 78, Box L
P.O. AE 09723

Officals:Principal Commercial Officer: James McCarthy
Commercial Officer: Stu Schaag
BISNIS Representative: Alex Kim

U.S. Consulate - Vladivostok (EST Plus 15 hours)
Location:32 Pushkin St. 690000, Vladivostok, Russia
Tel:+7-4232-268-458, 300-070
Fax:local: +7-4232-268-445, 300-091; satellite: +7-509-851-1011
Website:vladivostok.com/usis/indxeng.htm

MailingAmerican Consulate Vladivostok
Address:U.S. Department of State
Washington, D.C. 20521-5880

Officials:Consul General: The Honorable Doug Kent
Political/Economic Officer: Michael Scanlan

U.S. & Foreign Commercial Service (FCS) - Vladivostok
Address:32 Pushkin Street, 690000 Vladivostok, Russia
Tel: +7-4232-300-093
Fax:+7-4232-300-092
Sat.Tel/ Fax:+7-509-851-1211
Email: ovladivostok@cs.doc.gov
Website:vladivostok.com/usis/fcseng.htm

Officials:Principal Commercial Officer: Rich Steffens
BISNIS Representative: Svetlana Kuzmichenko

U.S. Consulate - Yekaterinburg (EST plus 9 hours):
Location:Post Office Box 400
620151 Yekaterinburg, RUSSIA
Tel:+7-3432-564-619
Fax:+7-3432-564-515
Website:198.80.36.136/abtusia/posts/RS1/wwwhye.html

Address:American Consulate General-Yekaterinburg
Department of State
Washington, D.C. 20521-5890

Officials:Consul General: The Honorable Dan Russell
Commercial Officer: Ann Breiter
BISNIS Representative: Elena Zheberlyaeva

NOTE: There are also a number of American Business Centers throughout Russia. To obtain more information, visit www.mac.doc.gov/bisnis.

RUSSIAN GOVERNMENT REPRESENTATIVES IN U.S.

Embassy of the Russian Federation
Address:1125 16th Street, N.W.
Washington, D.C. 20036
Tel:202/298-5700
Fax: 202/298-5749, 202/298-5735
Website:www.russianembassy.org
Official:Ambassador: The Honorable Yurii Ushakov

Consular Division (visas)
Hours: M-F, 9:00 - 12:30 and 2:30 - 6:00
Tel: 202/939-8913, 939-8918
Note:Visa information is available through www.russianembassy.org

Russian Consulates in the US

Consulate General of the Russian Federation
Address:2790 Green Street
San Francisco, CA 94123
Tel:415/928-6878, 415/202-9800
Fax:415/929-0306
Officials:Consul General: Mr. Yuri Popov
Commercial Consul: Mr. Eugene A. Baranov

Consulate General of the Russian Federation
Address:9 East 91st Street
New York, New York 10128
Tel:212/348-0926
Fax:212/831-9162
Official:Deputy Consul General: Mr. Gennady S. German

Consulate General of the Russian Federation
Address:2001 - Sixth Avenue, #323
Seattle, Washington 98121-2617
Tel:206/728-1910
Fax:206/728-1871
E-mail:consul@seanet.com
Website:www.russia.net/travel/visas.html (visa information only)
Officials:Consul General: Mr. Andrei V. Veklenko
Commercial Consul: Mr. Vassily Yunak

Russian Trade Representations

Trade Representation of Russia in the U.S.A.
Address:2001 Connecticut Avenue, N.W.
Washington, D.C. 20008
Tel:202/232-5988 or 202/232-0975
Fax:202/232-2917
Officials:Trade Representative: Mr. Yurii V. Akhremenko
Deputy Trade Representatives:
Mr. Vladimir Chibirev, Mr. Sergei Dmitriev, Mr. Igor Rizhkov

Trade Representation of Russia in the U.S.A - New York Branch
Address:400 Madison Avenue, Suite 901
New York, NY 10017
Tel:212/688-1618
Fax:212/688-1951
Officials:Trade Representative: Mr. Igor Korotkin
Senior Expert: Dmitry Kurganov

BUSINESS MULTIPLIER ORGANIZATIONS

American Chamber of Commerce in Russia (AmCham)
Kosmodamianskaya Nab. 52, Building 1, 8th Floor (Riverside Towers)
113054 Moscow, Russia
Tel. +7-095-961-2141
Fax +7-095-961-2142
Email: Amchamru@amcham.ru
Website: www.amcham.ru
Executive Director: Scott Blacklin

American-Russian Business Council
1250 Sixth Avenue, Suite 234
San Diego, California, 92101
Tel: (1-800) 428-9308
Fax:(619) 541-0104

Email: ARBCSC@email.msn.com
Website: www.russianconcil.org
President: Alexander Durmashkin

American-Russian Chamber of Commerce
One World Trade Center Chicago
929 Merchandise Mart
Chicago, IL. 60654
Tel: (312) 494-6562
Fax: (312) 275-2250
President: Helen Teplitskaya

Foundation for Russian-American Economic Cooperation
1932 First Avenue, Suite 803
Seattle, WA 98101
Tel: (206) 443-1935
Fax: (206) 443-0954
Email: Fraec@fraec.org
Website: www.fraec.org
President: Carol Vipperman

Pennsylvania-Russia Business Council
1760 Market Street, Suite 1100
Philadelphia, PA 19103
Tel: (215) 963-7079
Fax: (215) 963-9104
Email: prbc@worldnet.att.net
Website: www.fita.org/prbc
President: Valery Kogan

Russian-American Chamber
731 8th Street, S.E.
Washington, D.C. 20003
Tel: (202) 546-3275
Fax: (202) 546-4784
Chairman: J. William Middendorf II

Russian-American Chamber of Commerce
3025 South Parker Road, Seventh Floor
Aurora, CO 80014
Tel:(303) 745-0757
Fax:(303) 745-0776
Email: RussianBus@aol.com
President: Dr. Deborah Anne Palmieri

Russian Chamber of Commerce and Industry
6, Ilyinka Ul.Moscow, 103684
Tel: +7-095-929-0286; -0260; -0261; -0262; -0263
Fax: +7-095-929-0356
President: Stanislav Alekseyevich Smirnov
Expert on Accreditation: Sergey Borissovich Kulyba

U.S.-Russia Business Council
1701 Pennsylvania Avenue, NW Suite 650
Washington, D.C. 20006
Tel: (202) 739-9180
Fax: (202) 659-5920
Website: www.usrbc.org
President: Mr. Eugene Lawson

U.S. West Coast - Russian Far East Ad Hoc Working Group -- US Secretariat
1932 First Avenue, Suite 803
Seattle, WA 98101
Tel: (206) 443-1935
Fax: (206) 443-0954
Email: ginnab@fraec.org
Website: www.ahwg.org
Director: Ginna Brelsford

SELECTED LIST OF RUSSIAN GOVERNMENT LEADERS

President:Boris Yeltsin
Prime Minister:Sergei Stepashin

First Deputy Prime Ministers:
Mikhail ZadornovMacroEconomic Policy
Nikolai Aksenenko Economic Policy

Deputy Prime Ministers:
Vladimir ScherbakAgriculture and Food
Valentina MatviyenkoSocial Affairs
– abIndustry and Communications

Ministers:
Agriculture MinisterVladimir Scherbak
Culture MinisterVladimir Yegorov
Defense Minister Igor Sergeyev
Economics Minister
Finance Minister Mikhail Kasyanov
Foreign MinisterIgor Ivanov
Fuel and Energy MinisterViktor Kalyuzhny
Health Care MinisterVladimir Starodubov
Interior Minister Vladimir Rushailo
Justice MinisterPavel Krasheninnikov
Labor MinisterSergei Kalashnikov
Nationalities MinisterVyacheslav Mikhailov
Natural Resource MinisterViktor Orlov
Railroad MinisterNikolai Aksenenko
Regional PolicyValery Kirpichnikov
Science & Technology MinisterMikhail Kirpichnikov
State Property MinisterFarit Gazizullin
Taxes and FeesAlexander Pochinok
Trade MinisterMikhail Fradkov
Transportation MinisterSergei Frank

State Customs CommitteeMikhail Yegorov (Acting Chairman)Yegorov designated Acting Chairman 3/19/99

SELECTED RUSSIAN GOVERNMENT CONTACTS
IN THE RUSSIAN FEDERATION

Moscow Registration Chamber
Chairman:Vladimir Ivanovich Sobolyov
Street Address:Mokhovaya Ul., 11, Bld. 8-E, Moscow 103009
Phone/Fax: (095) 202-2787

Registration/Accreditation Service
Contact: Roald Nestorovich Lebedinskiy, Director
Tel: (095) 132-0500

Registration of Companies with Foreign Capital (Russian):
Contact: Tatyana Kuzminichna Nikanorkina, Expert
Tel: (095) 202-4042

Committee on Patents and Trademarks of the Russian Federation
Chairman:Vitaliy Petrovich Rassokhin
Street Address:2/6 Cherkasskiy Pereulok, Moscow, Russia
Tel:+7-095-206-6203
Fax:+7-095-923-4093

Russian Committee on Standards, Metrology and Certification (GOSSTANDART)
Chairman:Sergey Fyodorovich Bezverkhiy
Street Address:9, Leninskiy Prospekt, Moscow 117049
Tel:(095) 236-6208, -4044
Fax: (095) 236-6231, 237-6032 Minister of Trade Mikhail Fradkov

NOTE: The above information is current as of May 1999 but is subject to change without notice.

This report is provided courtesy of the Business Information Service for the Newly Independent States (BISNIS)