World The strange world MOSCOW — Everytime I drive through Pushkin Square, with its new-look golden arches dominating one side and a giant neon-lit Coca-Cola billboard the other, conflicting emotions rise in my gorge. The clash of eras and ideas often doesn’t subside in my mind until I reach the more familiar terrain at the foot of Gorky Street, where the massive presence of the Kremlin with its shining red stars reminds me of where I’m supposed to be. Joint ventures have arrived in Moscow, giving at least the downtown core a faint neon reflection of the global marketplace. Every incipient Soviet yuppie dreams of get- ting a job with one of these businesses and earning valuta — hard currency — with which scarce Western commodities can be purchased in the proliferating foreign exchange shops. Though I generally share the life of a Soviet consumer myself, I seem to harbour far more reservations about all this than most of my neighbors do. They appear eager to embrace it as the harbinger of onrushing American-style affluence. Though FROM MOSCOW few of them have any understanding of the actual political economy involved in advanced capitalism, they know all too well about the failures, lapses and outright screw-ups of their own system. In this light, their yearning for something better — even if it comes in the shape of a Big Mac — can only be treated with respect and sympathy. If there appeared to be any chance that Western corporations could deliver on that promise of consumer prosperity, I for one would be prepared to concede that the argument is over at least for this generation. By all rights the Soviet Union ought to be a rich country, it has all of the prerequisites, and hence the dismal state of its consumer production and distribution system becomes more and more intolerable to people with each passing day. People think, simplisti- cally but with brutal logic: if this is where ideology gets us, then to hell with ideology. Yet most of the joint ventures that begin with big promises and feverish fanfare never actually get off the ground. The reasons for this are complex. On any day, in any Mos- cow hotel bar, you can hear foreign busi- nessmen complaining about the problems they face: bureaucratic red tape, lack of market discipline or culture, the non- convertible currency. There is considerable merit in what they say. Having decided to allow joint ventures, there is much the Soviet government could do beyond what it has, to streamline decision-making proce- dures and provide a less confusing legal environment. You don’t have to listen for too long, however, to get the full sense of why Soviet conditions seem unacceptable to most Western businessmen. They don’t like the fact that trade unions are mandated for every enterprise and granted a wide array of powers by Soviet law. They can’t under- stand why Soviet officials are always harp- ing on the social and developmental impact of investments, “as if that were the bloody point of doing business.” I shared a lunch table with an American plastics manufac- turer recently, who told me frankly that he was through trying to negotiate with these thick-headed people and was going to inves- tigate building his facility in Brazil or Thai- land instead. The non-convertible ruble is the biggest single deterrent for most prospective inves- 8 e Pacific Tribune, March 5, 1990 OPENING THE GOLDEN ARCHES IN MOSCOW . standards to maintain. tors. The problem is that you can sell almost anything in vast quantities to Soviet custo- mers, from t-shirts to laundry powder, but cannot then simply convert your ruble prof- its to dollars and haul them home. In order to do profitable business, you have to buy some item of Soviet production with your rubles — something that isn’t already a state trading monopoly (ie: gold, caviar, furs, vodka, all the traditional things) — and export that. This seems to demand too - much effort and creativity for most. Of those joint ventures that have enjoyed some degree of “success,” very few have ‘McDonalds might offer a model of how other corporations could participate in transforming the Soviet economy by meeting Soviet social principles and economic priorities halfway.’ anything to do with providing goods or services to Soviet consumers. Most are res- taurants, shops or other concerns which deal only for hard currency payment with tourists, Moscow’s large foreign commun- ity and those Soviets who have access to valuta. It strikes me as a savage irony that even as the privileges once enjoyed by the highly- placed or well-connected few in this country are being gradually cut off under pressure of the new politics, a whole new arrogant, priv- ileged elite is being created. Moscow’s fam- ous GUM department store used to have several “special” shops where officials could buy scarce or imported goods without standing in line-ups. Those places were always there, discreetly tucked-away in quiet corners of the cavernous GUM store, with hidden entrances and electronic doors. If you didn’t know where to look, you probably wouldn’t find them. Now, as if to replace all that with a really cruel example of the hard-edged, insensitive flagrance that only the marketplace is capa- ble of, the Finnish Stockmann Company has opened an opulent consumer empo- rium just inside one of the GUM’s main entrances. As hard-pressed Soviet shoppers stream past, the first thing they see is Stockmann’s brightly-lit windows and the large sign that reads in Russian and English: “For hard currency — credit cards only.” There are only a handful of joint ventures which have so far actually brought some- thing useful to this country. Of course, they are few but significant; perhaps they even prove the whole concept worthwhile. These involve Western corporations that come to the USSR seeking long-term partnership, willing to adapt to Soviet culture, labour regulations and even the bureaucracy. They bring greatly-needed technology, know- how and managerial expertise, build plants and infrastructure, and find the ways to take their profits out in product. That brings me to McDonald’s. For all its weird, almost religious obsession with perfecting assembly-line fast-food produc- tion, and its sect-like approach to personnel relations, McDonald’s has managed to create an overwhelmingly positive example in this depressed, consumer wasteland. What’s more, they’ve done it by utilizing and developing Soviet resources at every stage from farm to mouth. They’ve put together supply networks and built process- ing and storage facilities. They sell their “Big Maks” and ““Gamburgers” to hungry Soviets at affordable prices in rubles. There is nO point in asking whether this is what Soviets really want; the gargantuan line-ups of joint ventures .. all the Western style marketing cliches but offering some useful answer that question. Some of the standards McDonald’s has — imposed on its new environment are down- right silly: there was, for instance, the long- running dispute about Soviet potatoes being of unacceptable quality — not be- cause they lacked nutrition, but because they failed to fry up with a nice golden coat like McPotatoes ought to do. Other points — are not so frivolous. Standards of freshness, cleanliness, efficiency and, yes, even a little politeness from the clerk behind the counter are all things that Soviet economic culture desperately needs to learn. As for its new Soviet employees, I admit to feeling rather ambivalent. It is not espe- — cially uplifting to see dozens of Soviet kids, looking just like their Canadian counter- parts, hustling about, mouthing universal McDonald’s cliches — in Russian — and flashing artificial McSmiles. On the other hand, they do have the distinction of being the only unionized McDonald’s employees in the world, and their pay of 1.50 rubles per — hour is quite decent by Soviet service sector — standards. The only complaint I’ve heard so — far is not easy to sympathize with: one — young woman said she really had expected — much more, and probably wages in hard © currency, from such a famous Western cor- | poration. However, McDonald’s remains a pecul- iar, almost eccentric anomaly on the joint venture scene. In some ways, it might offera — model of how other corporations could par- — ticipate in transforming the Soviet economy by meeting Soviet social principles and eco- nomic priorities halfway, and working out long-term conditions of mutually-beneficial partnership. Undoubtedly this could be part of the answer for the USSR as it seeks to assimilate world progress and put it to work as quickly as possible. Judging by the record so far, however, if this is to become reality then the Soviets are not the only ones who will have to make some major changes in attitude and revise their economic methods.