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Foreigners Decry the Soviet Business Climate

A Poll Indicates That a Lack of Basic Facilities and Services — Plus Overpriced Goods — Makes the Country a Difficult Place To Work

By Michael Parks
October 4, 1991

As desperate as the Soviet Union is for Western investment, technology and management know-how, the government has done so little to improve the business climate that the country ranks in the minds of the foreign businessmen here as a very difficult, even forbidding, place to work, a new poll shows.

Office and store space are almost impossible to find, banking services are archaic, office supplies very difficult to obtain and the goods and services they do buy are greatly overpriced, according to the poll of foreign businessmen, diplomats and journalists in the Soviet capital.

Yet the survey conducted by two California firms — PBN Co. and GLS Research, both of San Francisco — found that Moscow's foreign residents believed that the business climate is getting better, and fundamental reforms should come more rapidly as a result of the conservatives' defeat in the August coup d'etat.

"There is a strong message from this poll that the Soviet Union is going to have to do much, much better at making it possible for foreign businessmen to work in Moscow if it is going to get investment on the scale it needs," said Peter B. Necarsulmer, president of PBN, a public relations firm.

"But there is a second message of underlying optimism that the Soviet Union can make it, politically and economically."

Results of the survey are likely to become an important element in Western companies' decisions about whether to pursue trade with the Soviet Union.

The survey showed that 46% of the respondents regarded Moscow as a more difficult place to do business than other international centers, and it reflected severe shortages of even the most basic needs of a company, such as office space, banking facilities and travel agents.

Living conditions were sharply criticized. Nearly two-thirds found the Soviet capital inferior to other international centers, with a litany of complaints that ranged from pollution, potholed streets and litter to alcoholism, crime and prostitution.

Medical care was so poorly regarded that nearly two-thirds said they would seek treatment in another country if their illness or injury was not life-threatening.

Seventy-two percent of those surveyed said they believed that they were overcharged for what they could obtain, and 78% expected increases in the cost of living and in doing business here as the Soviet economy goes through a wrenching transition from central planning to a free market.

Despite these misgivings, more respondents believed that the business climate had improved rather than deteriorated over the past year — 43% versus 25% — and two-thirds believed that reforms will be accelerated by the collapse of the coup.

But the respondents, a sample of Americans, Europeans and Asians weighted to represent a permanent foreign community of more than 20,000 people, were nonetheless divided in their assessments of the country's future.

Forty-five percent said they believed that the Soviet Union would break up, for example, but 37% said it would remain basically one country.

Carried out by GLS Research and the Soviet Center for Public Opinion and Market Research, the poll surveyed the opinions of more than 600 businessmen, diplomats and journalists officially accredited by the Soviet government last month. Gary L. Stieger, president of GLS Research, said the results were accurate within 4 percentage points.

Moscow Blues

Results of a survey of 609 foreign business people, diplomats and journalists who live in the Soviet capital, comparing it to other places. The margin of error is a plus or minus 4.1%

Many say that Moscow is lousy place to get business done. . .
Above average: 16%
Average: 22%
Below average: 46%
Not sure/No answer: 16%

. . .but not such a bad place to work.
Above Average: 22%
Average: 39%
Below average: 35%
Not sure/No answer: 4%

Source: the Moscow Poll, conducted by GLS Research and the PBN Co., both of San Francisco.