Part 5 (1/2)
The FSB ordered Kaliningrad customs to prohibit bulk exports of Stolichnaya. Cases of the drink are routinely confiscated. Criminal charges were brought against directors and managers in the firm. The Deputy Minister of Agriculture is discrediting SPI in meetings with its distributors and business partners abroad. He is also accused by the firm of obstructing the court-mandated registration of its trademarks.
The courts have lately been good to SPI, coming out with a spate of decisions against the government's conduct in this convoluted affair.
But on February 1, the firm suffered a setback, when a Moscow court ruled against it and ordered 43 of its brands, the prized Stolichnaya included, returned to the government (i.e., re-nationalized).
SPI is doing its best to placate the authorities. It is rumored to have offered last month to use its ample funds to supplement the federal budget. It has indicated last September that it is on the prowl for additional acquisitions in Russia - a bizarre statement for a firm claiming to have been victimized. ”The Moscow Times” reported that it is planning to sign a $500,000 sponsors.h.i.+p agreement with the Russian Olympic Committee.
Summit Communications, a country image specialist, placed this on its Web site in November last year:
”One example of a savvy Russian company that has managed to do well in the West by finding the right partner is the Soyuzplodimport company (see also p. 14). Soyuzplodimport, or SPI, has the exclusive rights to export Stolichnaya, which vodka lovers in the U.S. fondly refer to as 'Stoli'. Some 50% of the company's export turnover comes from the United States, thanks mostly to its strategic alliance with Allied-Domecq for U.S. distribution.
'I'm not sure that all Americans know where Russia is on the map, but most of them know what Stolichnaya is,' muses Andrey Skurikhin, general director of SPI. 'I want the quality of Stolichnaya in America to create an image of Russia that is pure, strong and honest, just like the vodka. At SPI, we feel that we are like amba.s.sadors and we will try to do everything to create a more objective and positive image of Russia in the U.S.' ”
SPI's troubles may prove to be contagious. Allied Domecq, its British distributor in America and Mexico, now faces compet.i.tion from Kryshtal International, a subsidiary of the troubled Kristal distillery, 51% owned by Rosspirtprom, a government agency. Kryshtal signed distribution contracts for ”Stolichnaya” with distilleries backed by the Russian ministry of agriculture.
Allied and Miller Brewing have announced a $50 million investment in product launch and marketing campaigns only two years ago.
”Stolichnaya” (nicknamed ”Stoli” in the States) sells 1 million 12-bottle cases a year in the USA (compared to Absolut's 3 million cases).
The trouble started almost immediately with the first foreign investments in SPI. As early as 1991, Vneshposyltorg, a government foreign trade agency, tried to export Stolichnaya in Greece. This led to court action by the Greeks. Vodka wars also erupted between the newly-registered Russian firm ”Smirnov” and Grand Metropolitan over the brand ”Smirnoff”.
The vodka wars are sad reminders of the long way ahead of Russia. Its legal system is rickety - different courts upheld government decisions and SPI's position almost simultaneously. Russia's bureaucrats - even when right - are abusive, venal, and obstructive. Russia's ”entrepreneurs” are a penumbral lot, more enamored with off-sh.o.r.e tax havens than with proper management. The rule of law and private property rights are still fantasies. The WTO - and the respectability it lends - are as far as ever.
Let My People Go
The Jackson-Vanik Controversy
By: Dr. Sam Vaknin
Also published by United Press International (UPI)
The State of Israel was in the grip of anti-Soviet jingoism in the early 1970's. ”Let My People Go!” - screamed umpteen unfurled banners, stickers, and billboards. Russian dissidents were cast as the latest link in a chain of Jewish martyrdom. Russian immigrants were welcomed by sweating ministers on the sizzling tarmac of the decrepit Lod Airport. Russia imposed exorbitant ”diploma taxes” (reimburs.e.m.e.nt of educational subsidies) on emigrating Jews, thus exacerbating the outcry.
The often disdainful newcomers were clearly much exercised by the minutia of the generous economic benefits showered on them by the grateful Jewish state. Yet, they were described by the Israeli media as zealous Zionists, returning to their motherland to re-establish in it a long-interrupted Jewish presence. Thus, is a marvelous fiat of spin-doctoring, economic immigrants became revenant sons.
Congress joined the chorus in 1974, with the Jackson-Vanik Amendment to the Trade Reform Act - now t.i.tle IV of the Trade Act. It was Sponsored by Senator Henry (”Scoop”) Jackson of Was.h.i.+ngton and Rep. Charles Vanik of Ohio, both Democrats.
It forbids the government to extend the much coveted ”Most Favored Nation (MFN)” status - now known as ”Normal Trade Relations” - NTR - with its attendant trade privileges to ”non-market economy” countries with a dismal record of human rights - chiefly the right to freely and inexpensively emigrate.
This prohibition also encompa.s.ses financial credits from the various organs of the American government - the Export-Import Bank, the Commodity Credit Corporation (CCC), and the Overseas Private Investment Corporation (OPIC).
Though applicable to many authoritarian countries - such as Vietnam, the subject of much heated debate with every presidential waiver - the thrust of the legislation is clearly anti-Russian. Henry Kissinger, the American Secretary of State at the time, was so alarmed, that he flew to Moscow and extracted from the Kremlin a promise that ”the rate of emigration from the USSR would begin to rise promptly from the 1973 level.”
The demise of the USSR was hastened by this forced openness and the increasing dissidence it fostered. Jackson-Vanik was a formidable instrument in the cold warrior's a.r.s.enal. More than 1.5 million Jews left Russia since 1975. At the time, Israelis regarded the Kremlin as their mortal enemy.
Thus, when the Amendment pa.s.sed, official Israel was exuberant. The late Prime Minister Yitzhak Rabin wrote this to President Gerald Ford: