David Cannon, president of the East Asia Co. of Bellevue, Wash., still has high hopes for his new joint-venture sawmill in the Russian Far East.
Russian President Boris Yeltsin's dramatic moves this week to preserve his reform program will speed up the move toward a market economy and result in a regime more friendly to U.S. trade and investment, he said immediately after returning from the opening of the sawmill.Mr. Yeltsin on Tuesday struck out against his opponents by dissolving parliament and calling for new elections.
Mr. Cannon's trading company opened the $2 million Lesco International sawmill at Yuzhno-Sakhalinsk, the regional capital for Sakhalin Island, to recut Russian larch boards to Japanese specifications.
The 30-man mill is run by Ure'k, a joint venture of Russian and Austrian lumber companies, and NDC International, a family-run logging company from Olympia, Wash., that shifted to Russia after environmental restrictions shut down its timber operations in western Washington.
The recut boards are being packed for for a 60-mile ocean voyage next month from the Port of Korsakov on Sakhalin Island to the Port of Wakanai on Hokkaido Island in Japan. There, they will be sold to Japanese construction companies.
"The Russians already have made almost unbelieveable progress toward free markets and the work ethic in just the last two years," Mr. Cannon said, noting that the change seems to be taking place most quickly in areas near production-oriented centers in Japan and China.
Mr. Cannon said Russian political analysts had been speculating for several weeks that Mr. Yeltsin would have to dissolve the parliament. Following a meeting to firm up support with Russia's generals two weeks ago, dissolution of parliament, which Mr. Yeltsin decreed Tuesday, was almost a foregone conclusion, he said.
"The Lesco mill is an example of what we envision for the future of Sakhalin and the Russian Far East," Mr. Cannon said. "The mill takes a low- quality Russian product, adds value with American technology and produces a valuable product to sell on the world market."
Other Russian experts on the West Coast are more cautious in appraising this week's events.
Elisa Miller, publisher of the monthly newsletter Russian Far East Review, said many analysts see the success of Mr. Yeltsin's bold steps as being tied to whether the far-flung subdivisions of Russia go along with the call for new elections.
But she noted that telephone and telex messages from the Russian Far East reported that business continued as usual despite the crisis in Moscow.
Economist Judith Thornton at the University of Washington predicted a collapse of many industrial sectors in Russia if barriers protecting those sectors from competition, particularly from highly efficient Pacific Rim factories, are removed.