Wary Indian businessmen have been shying off the Russian bear hug. Russians find it inexplicable. Is it ennui, after four decades of state-sponsored spirited economic and political cooperation? Or worse, the fear of the unknown. The Soviet era was different. If an Indian exporter send goods to Moscow, a handsome return on investment was guaranteed. The governments took care of that. However, in the aftermath of the collapse of the Soviet Union, the free market experiment in the Russian Federation has generated forces which have been extremely difficult, if not impossible to control. The Russian private enterprise has been grappling with market forces. Indian businessmen too, used to a huge protected market at home, have been compelled by the forces of globalisation to look overseas. It is logical to look at safe havens, where at least the return is guaranteed. The experience of some Indian businessmen, who have braved odds to tap the Russian market has been far from a happy one. A fewlost their investments despite possessing confirmed letters of credit which Russian banks refused to honour. The message went down by word of mouth: Russia is not safe. Partly, the bad image was built up the West-dominated mass media which continuous played up stories of the Russian mafia. " It was destructive propaganda", says Albert S. Chernyshev, Ambassador of Russian Federation to India.

During the heydays of Indo-Soviet economic cooperation, the two-way trade had touched $5.5 billion per annum. In the aftermath of the collapse of the Soviet Union, it dramatically slumped which is understandable. But in the decade gone by, it has managed to inch upwards to barely $1.5 billion. Are you satisfied with the initiatives at the official and private levels?

In the Soviet era, we cooperated on a huge scale. Indian heavy industry was created with our help on the basis of long-term, low-interest credits. The West refused to help India. The basis of our cooperation was state intervention and supportin critical areas. You have honoured your commitments. You are repaying your debts honestly, almost $ 1 billion every year. Only $7 billion debt is left. We need goods from you, mostly consumer items, which is paid out of the rupee debt. 85 % of our import trade is still on the basis of the rupee funds out of the accumulated debt. Trade has now stabilised around $ 1-1.5 billion which certainly does not reflect the true potential.

Do you see any possibility of Indo-Russian economic cooperation once again touching the heights attained during the Soviet era?

Russia and India started economic reform at the same time. With the introduction of market economy, the base of state credits was eliminated and trade volume slumped. We thought that private initiative will fill in the gap. It did not happen. Monetary policy based on high and low interest rates failed in Russia. Its influence on Russian private enterprise was very little. It cannot happen overnight. The process of economic reform does not take twoor five years but may take two decades. Free market economy is not a bazaar. We have now realised that state control cannot be denied. Private enterprise must be supported and given freedom to grow. In most countries, the economy is supervised by the government which makes corrections, if things are not positive. Japan is an example of effective development, where the government is continuously making corrections.

What specific initiatives have you taken to enhance the level of private economic cooperation? What do you think is missing from the Indian side?

We are in constant touch with the Indian government structures. The inter-ministerial commission has been meeting regularly. Specifically, in the case of private initiatives, we are interacting with CII, Ficci, Assocham and local and state level chambers. We organise seminars and bring business delegations at the joint business council meetings with Ficci and Assocham. Your apex chambers should formulate recommendations and set forth theirdemands on what they need from the government. The government should try to understand the demands and take concrete measures, even if they are of a temporary nature to help business. We should not exaggerate the freedom of business. The state is not the enemy of business. Both should cooperate. It means creating a special privileged regime for business to cooperate with the state productively.

Our investment figures are really pathetic. Russian enterprises invested merely $2.1 million in India in 1998 and Indians only a did a shade better at $2.3 million. Have you identified the missing factor in Indian and Russian private initiatives?

Indian businessmen should be brave. They appear to be waiting for something. I don't know what. They don't want to take risk.

Don't you think the apprehension in the minds of Indian businessmen about the Russian mafia is genuine?

Russian mafia was created in the mass media which likes sensation. This is destructive propaganda. I will give you twofigures. The US is a very democratic, free market economy. In the US, crime register, 14.5 million cases were listed last year compared to only 2.5 million in the Russian Federation. If a businessman is killed in Moscow, a big noise is made as if an atomic bomb has exploded. Elsewhere, it is treated as normal. Crime level in the Soviet era was very low. Crime is due to the process of economic reform which for us is a very extraordinary phenomenon. You must not forget, more than 10,000 foreign companies are working fruitfully in Russia of which 200 are Indian. We are taking measures to check crime. If Indian businessmen have a problem, they should inform the embassy. We will help.