US Likes Hearing the Kalmykia Story American Investors, Public and Private, Cheer the Republic's Market Reforms

Article excerpt

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 reserves.

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 350,000 people.

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. …


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