Alaskans Capitalize On Closeness to Russia

ISOLATED for decades in central Siberia, Dr. Garrijl Abramovich Ilizarov toiled in obscurity in a log-cabin clinic.

During that time, he developed a rehabilitation technique for those diagnosed as having orthopedic problems.

Dr. Ilizarov's technique, money from individual investors, and a $226,675 grant from Alaska's Science and Technology Foundation, led to the founding of Autogenesis Inc., a two-year-old company that makes and rents automated devices using the process Ilizarov pioneered.

Autogenesis's founders are among a number of Alaska entrepreneurs who are seeking to capitalize on their state's proximity to Russia.

Better than other Americans, these Alaskans claim, they understand their fellow northerners who are even more distant from the Moscow-oriented Russian "center" than Alaskans are from the Lower 48.

At last count, 87 Alaskan-Siberian joint ventures had been established, said Doug Barry, deputy director of the University of Alaska's Center for International Business. They involve everything from Russian crafts sold to tourists in Anchorage shops to sophisticated environmental cleanup services enhanced by Siberian bioremediation technology.

For Autogenisis Inc., getting start-up money in the Lower 48 was difficult. "It was certainly almost a joke. 'You're from Alaska, right? And you're coming up with this medical high-tech device?' " says John Pursley, an electronics specialist and cofounder of the company.

In numbers and dollars, Alaskan entrepreneurs doing business in the Russian Far East are dwarfed by Japanese investors, Mr. Barry says. But Alaskans have a special relationship with their Bering Sea neighbors that has been nurtured by history and culture, he says: Many Alaskans see in the Russian Far East a frontier similar to prestatehood Alaska.

"There's a sense that there's an opportunity not unlike the Wild West or 90 years ago," he says. "There's also a sense that people are participating in a piece of history. It's not just a pursuit of raw, naked capitalism."

From top government officials to rock bands from tiny Alaska fishing towns, thousands of Alaskans have crossed the Bering Strait to promote cultural, environmental, and business ties, Barry says. Anchorage has been the top US West Coast destination for visitors from the former Soviet Union for years, state officials say.

Many Alaska leaders envision their state as a future service center for the developing Russian Far East. Among the Alaskan companies expanding to Russia is the Arctic Slope Regional Corporation, a Barrow-based, Inupiat Eskimo-owned group with subsidiaries specializing in Arctic oil production, Arctic construction, and rural telecommunications.

A service-center strategy could backfire, however. The resource-rich Russian Far East could wind up replacing Alaska as a source of Pacific Rim oil, fish, timber, and minerals. Of immediate concern to Alaskans are the booming Japanese-Russian fishing joint ventures, which could weaken Alaska's position in the important but crowded Japanese salmon market.

Concerns also are growing over the eastern Siberian environment, which is vulnerable to Russian economic desperation. The huge taiga forest is being considered for heavy logging; mineral and oil deposits could be tapped without environmental regulations that control production on this side of the Bering Strait. A plan to establish an international peace park across the strait has stalled, and Russian and US leaders have diverted attention from environmental to economic demands.

Efforts to set up joint ventures are not without complications: Alaskans with the best intentions have seen their businesses entangled in Russian confusion.

Consider the case of Indian Valley Meats, a sausage maker from the Anchorage-area community of Indian that set up the first US joint venture in the Magadan region of Russia.

The venture, started in 1989, built two reindeer-meat plants in Chaibuka in the Magadan Region and Haruta in the Nenetsk Autonomous Region. Both are tiny native villages with traditional lifestyles centered on reindeer herding.

The plants have taught the Siberians methods of processing and preserving food - a valuable skill in the former Soviet Union - as well as the fundamentals of market economics.

The venture's Russian partners arranged to trade reindeer horns, highly valued in Asia for alleged health benefits, to South Korea in exchange for money that would buy meat-plant equipment - a barter system driven by the ruble's low value on foreign-exchange markets.

But now the Russian partners are alleged to have absconded with the reindeer-horn revenues, leaving the Siberian reindeer herders and the Alaska entrepreneurs unpaid and production at the Chaibuka plant at a near-standstill.

Indian Valley Meats has hired a Moscow attorney to prosecute the Russian partners, and it is seeking to patch up the joint venture by working with the manager of the Haruta plant.

"Our partners have been so busy stealing from everybody they haven't been paying any attention to production," said Andrew Crow, an Indian Valley Meats interpreter. "Finding honest partners is tough in Russia."