WESTERN FIRMS WEIGH BUSINESS RISKS

WESTERN FIRMS WEIGH BUSINESS RISKS

Officials from Western companies with business interests in Russia expressed dismay at the bloodshed in Moscow Monday, but said their only choice was to wait for the storm to pass.

"People will think, not twice, but three times about investing in a country with so much trouble," said Adam B. Ulam, director of Harvard University's Russian Research Center.Despite the surrender of parliamentary dissidents to the forces of President Boris N. Yeltsin and relative calm in Western financial markets, Mr. Ulam predicted the images of a burning Parliament building would persist for months in investors' minds.

There were also unconfirmed reports that some Western business officials had headed for Moscow's airports after fighting broke out Sunday.

Some small businesses, such as Boston's Diomedes Inc., a Russian-American trading firm, closed their Moscow offices for the day as fighting raged at the nearby Parliament building.

John Boynton, Diomedes' president, said his company, whose sole business is exporting computers and other equipment to Russia and importing semifinished metal goods, was largely at the mercy of events.

"This is the only business we're in. We're not in a position to decide whether we're going to continue to invest or stop investing. We're 100 percent committed," Mr. Boynton said.

At larger companies, the reaction was mixed. KPMG Peat Marwick, an international consulting firm, kept its Moscow office open with a staff of some 150 Russian nationals, but non-Russian employees were ordered to stay home, said Nina Dimas, international program manager in New York.

The company plans to reassess the situation after order is restored.

"It's scary to anybody but especially to us Americans who have never experienced anything of this sort," Ms. Dimas said on Monday.

For businesses with involvement beyond Moscow, there could be even greater uncertainty as Russia's distant regions decide whether to back the Yeltsin government or go their own way by declaring autonomy and control over resources.

Alan J. Stoga, managing director of Kissinger Associates Inc., a New York consulting firm, said he had just finished meeting with a group of business officials who had been considering investing in Russia.

"I must say they were all quite pleased that they had chosen not to," Mr. Stoga said. Western companies with heavy long-term involvement like the oil industry would remain in Russia, Mr. Stoga said, "because God put oil where he put it."

But for many others, the risk premium on doing business will rise, he said.

"It's a little bit like the day after an earthquake. You know for sure you're in an earthquake zone," said Mr. Stoga.

Mark Fredrickson, a spokesman for Digital Equipment Corp., the Maynard, Mass., computer manufacturer, said the company has pursued a careful approach to the Russian market by opening sales and service offices in Moscow and St. Petersburg. These offices are supported from an office in Vienna.