UNITED States policymakers and business executives have been
dismayed by the faltering pace of reform in Russia, especially in
the weeks since President Boris Yeltsin suppressed the
parliamentary uprising. One bright spot from Washington's
perspective is the self-governing republic of Kalmykia.
Republic officials, visiting Washington recently to seek more US
aid, portray Kalmykia as a leader in free-market reform.
"We want to show all of Russia how we can be ahead, and be the
best," declares Sergei Baranenko, state economics adviser to the
Kalmyk Republic. "We will do this without subsidies from Moscow,"
he adds proudly.
The emergence of Kalmykia as a free-market showroom is an
unlikely development for the quiet republic located alongside the
Volga River, where a sparse and mostly poor Buddhist population
shares the terrain with sheep and pockets of untapped oil and gas
Since last April, when multimillionaire Kirsan Ilumzhinov was
elected the first president on a get-rich-quick platform, the
government has been actively pursuing economic development.
The obstacles they face are formidable. Chief among them is the
republic's ailing infrastructure. Kalmykia's communications system
is poor, the roads are in very bad condition. "Everything was
built 25 years ago," Mr. Baranenko laments.
A new legal code
To boost development, President Ilumzhinov's top officials and
a sympathetic legislature established a commercial code this past
summer. The government is planning to attract global investors by
setting the republic up as a tax-free zone, creating large banks,
and building an international airport. All of this, they claim, is
the fastest way to raise living standards for the republic's
Ilumzhinov's motto is "You have to have money to be
independent." Two of his top advisers conveyed that message here
recently in an attempt to enlist the financial support of US
government agencies, such as the Export-Import Bank and the
Overseas Private Investment Corporation.
Helping Kalmykia find its capitalist path is Peter Barenboim,
vice president of the Union of Advocates in Moscow, who took the
lead in crafting the then-Soviet Union's, now Russia's banking laws
and commercial code. But after more than three years, his efforts
to establish the proper legal framework for foreign investment have
been thwarted by political and bureaucratic roadblocks.
Mr. Barenboim is now focusing on Kalmykia, where he found a
newly elected president and lawmakers flush with enthusiasm for
capitalism and creating prosperity through the free market. …