Russia's Wild East Bucks at Moscow
| KHABAROVSK, RUSSIA
'BUSINESS is bad,'' says Sergei Khalin. An importer of used Japanese cars to the city of Khabarovsk, in Russia's Far East, he once sold Nissan Bluebirds and Toyota Carinas at more than 200-percent profit in the chaotic aftermath of the Soviet collapse.
But now Mr. Khalin barely breaks even selling cars that, with their steering wheels on the right-hand side - the wrong side for Russia - are symbols of the Far East's unique brand of Wild West capitalism. ''It is all thanks to the stupid policies in Moscow,'' he says, then adds: ''The word 'thanks' should be in quotation marks.''
Heavy-handed economic policies have put the brakes on this distant region's free-wheeling trade with neighboring Asian nations, raising calls here for more independence from Moscow.
Moscow's interference means hard times for everyone from car importers to the Russian ''professional shoppers'' who make their living smuggling leather jackets and $10 Rolex watches through customs.
Taken together, the tangle of import and profit taxes that traders face can often add up to more than 100 percent of their wholesale value. It has been enough to drive many out of the trade businesses entirely. Even the legions of Chinese peddlers that once lined the streets by the local market, hawking cheap toys and warm-up suits, are dwindling away.
While few here seem to miss the peddlers, many in this city of 700,000, only 20 miles from the Chinese border, are calling for more independence from Moscow to decide their own economic fate. It has all become a leitmotif of post-Soviet Russian life, a tug-of-war between ''the center'' and distant regions that are seeking to establish their own identities.
MiGs for Moscow
Some here advocate the creation of a Far Eastern republic, though they are in the minority. More people talk of a general objection to being treated like Moscow's ''colony'' - supplying timber, oil, metals, precious gems, caviar, and MiG fighters, and seeing little in return.
''We rely on foreign trade to a much greater extent than does European Russia,'' says Aleksander Misyun, deputy director of the Association of Trade Cooperation with Countries of Asia and the Pacific Rim. Hoped-for foreign investment in domestic enterprises and joint ventures has been sporadic, leaving trade as the only viable part of the region's economy. This is why high tariffs, regulated by Moscow, are so resented here.
''The Far East should be able to have greater say in determining its trade policy,'' adds Mr. Misyun. ''There need to be breaks for importers here so that goods can be sold at affordable prices. The Khabarovsk customs chief even went to Moscow with such a proposition, but he got nowhere.''
In Moscow ''they still don't understand that the [Russian] Far East is not part of European Russia,'' says Alexander Ivanchenko, who manages a Khabarovsk-based venture-capital fund that is administered by the European Bank for Reconstruction and Development and sponsored by the Japanese government.
According to Mr. Ivanchenko, the Russian Far East is more a victim of indifference than of any conscious effort to control the eastern reaches of the empire. ''The center barely knows we exist. You have an area the size of the United States, with a population of 8 million people who produce 4 percent of Russia's gross national product. It is not even an issue.''
Even so, the Russian Far East's wealth of natural resources and proximity to Asian markets could provide the fuel for explosive economic growth in the region, and local biznesmeny and politicians know it.
It is becoming fashionable in Russia's far-flung provinces for regional governors to make political pilgrimages to Moscow to demand greater economic autonomy for their territories. The most recent pilgrimage was made by the governor of the neighboring territory of Primorsky, home to the port city of Vladivostok, and locals here are predicting that their governor will be the next to make the 4,000-mile trip to ''the center.''
Starting with noodles
It is still an open question whether the territory of Khabarovsk, which is roughly twice the size of Japan, will break free from the center's long reach to gravitate further toward Asia. The final outcome may have just as much to do with culture as it does with politics. Many here are finding that the cultural divide between the territory of Khabarovsk and Asia is much wider than the narrow geographical expanse that separates the two.
''Believe it or not, the center is still Moscow,'' says David Ciagane, the regional director of a major American venture capital fund. ''Maybe people here eat a lot of instant noodles, but they are basically European and not Asian.''
Just ask Aleksei Lysenko, who imports women's lingerie. ''We went to South Korea first,'' he said, ''but we couldn't find anything suitable. The style was too Asian.''
In spite of everything, local entrepreneurs still cast a wandering eye toward Asia and the potential for tapping into its dynamic economies. ''This is a time of transition,'' says Aleksei Novozhilov, the owner of a Russian company that trades with China in tangerines, apples, and spare parts for Russian-made airlines.
''They say trade with China has gone down by 60 percent in three years ... but there is huge potential for growth, especially in the area of light industry,'' he says.
After June, will the center hold?
He and many others believe that economic necessity, and the realities of Russia's political geography, will eventually pry open Khabarovsk's door to Asia for good. How soon this will happen, many say, will depend on the result of Russia's presidential elections in June.
Even a highly centralized government, however, will be hard pressed to keep the distant regions in line. Regional governments are becoming increasingly bold in their demands for a greater degree of economic autonomy, and there is already a core constituency of businesspeople and traders to back them up in the upcoming June elections. But will the center be wary of letting too much political and economic authority slip away?
''Perhaps,'' says one high-ranking trade official in the Khabarovsk regional administration, ''but the tide has already begun to shift away from the center and there is nothing they can do to stop it.''