Soviet changes provide opportunities for mines

This is the first of a regular monthly column by George Miller, president of the Mining Association of Canada. I recently had the opportunity to visit Moscow and Leningrad to make a preliminary investigation of potential business opportunities for the Canadian mining industry in the Soviet Union.

I wanted to know how the Soviet people are affected by Gorbachev’s policies of perestroika (economic restructuring) and glasnost (openness). Is the centrally planned economy shifting toward market forces? Are the people better off?

There is no doubt that restructuring is taking place. Within government, about 40 departments have disappeared, mainly by amalgamation, with consequent job loss. Some production enterprises are gaining autonomy as well. However, even now, these enterprises are subject to central planning. As a result, production costs are still not known, and distorted decisions often result.

Some evidence of perestroika is also evident in everyday life. One counter in a Moscow food store revealed itself to be a Soviet-Canadian joint venture pizza shop. A single employee was on duty, serving pizza slices to a queue of hungry or merely curious customers. A whole pizza, small size, cost nearly four rubles, or about 1.5% of an average Soviet monthly wage.

The unofficial economy is flourishing. If a visitor takes a few steps from his hotel or goes to a popular shopping district, he is approached by a succession of young entrepreneurs who offer to change money at about 10 roubles to the dollar (twice the tourist rate and 20 times the “official” rate). Private, hard- currency transactions are illegal, but enforcement is half-hearted.

It seems perestroika has not yet improved the lot of the ordinary citizen, however. Consumer goods are scarce and of poor quality. Food and other stores have little merchandise that we would consider desirable. Queues are everywhere; this one for chicken, that one for meat, another for candies. Vegetable offerings, at least in January, consist of a few wrinkled potatoes and carrots, along with some cabbages and beets. The average shopper spends two hours a day finding the necessities of life. “We have lots of rubles but nothing to buy” is a common complaint.

Fortunately, glasnost is becoming a reality. While procedures remain bureaucratic, I encountered none of the suspicion or surveillance that was formerly so characteristic of eastern Europe. Soviets speak freely to outsiders about such matters as politics and the prevalent social problems of alcoholism and anti-semitism.

Soviets say that economic conditions have greatly deteriorated in recent years. Some are inclined to blame perestroika, others their compatriots’ laziness.

Despite some disadvantages one is likely to encounter, I strongly recommend a visit to the USSR for two reasons. First, there will be no better time to witness the onetime opening-up of Soviet society and to experience the pleasure of the people in showing their country to Westerners.

Second, there is business to be done. Canadian mining capability is highly regarded by the Soviets. Our interest is welcomed and I concluded that deals are there to be made, not only in mining joint ventures, but also in the exchange of technology.

One visitor has likened the current state of the Soviet economy to that of South Korea 25 years ago. With rapid economic growth, those who make astute business connections now could make big gains in future. There are risks, including political risks, but only a firsthand evaluation of the risks and potential rewards will permit an informed decision.