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Canadian capital, expertise sought by the CIS.

Northern Ontario entrepreneurs looking for opportunities in the Commonwealth of Independent States (CIS) may not find them in the traditional venues, but they are there.

The independent states have all the manpower and raw resources they require, but what they need is investment capital, expertise and technology.

"They are looking for new technology, in some cases technology that does not exist," says Thunder Bay-Atikokan MP Iain Angus.

According to the MP, the best opportunities exist in providing these countries with the knowledge they require to rebuild their infrastructure and economies.

Angus visited Russia, Ukraine and Kazakhstan from July 2 to 11 as a member of a delegation led by International Trade Minister Michael Wilson.

Approximately 55 Canadian business people, five members of parliament and senior trade officials accompanied Wilson. The trade mission was intended to build on the Canada-Russia Agreement on Trade and Commerce signed by Prime Minister Brian Mulroney and Russian President Boris Yeltsin during Yeltsin's visit to Canada in June.

The itinerary for the mission included visits to industrial sites and meetings with government leaders and officials.

Timiskaming MP John MacDougall, who headed the energy and mining contingent of Wilson's trade mission, notes that trade opportunities will be difficult to establish because of the lack of available capital in the CIS.

Firms interested in trade with Russia, says MacDougall, must be willing to look at joint agreements. The cost of doing business is quite high, and companies investing in this type of international trade may have to wait a few years before the money begins to flow.

For example, nearly $11 million belonging to Canadian companies was lost when the former Soviet state bank Vnesheconombank collapsed last year. The Russian government has promised to pay the money back, but has given no assurances it will do so soon.

The government of Canada, meanwhile, is offering $200 million in insurance coverage to several Canadian companies which plan to invest in Russia.

A $100-million line of credit has been established for Russia and a $20-million credit line for Kazakhstan.

The establishment of credit lines is helpful, but Angus says a deal made by Algoma Steel and Russia in July eats up $50 million of the credit.

Algoma Steel is to provide $50 million worth of seamless steel castings for the Russian oil industry. The contract is expected to keep the company's No. 2 tube mill, which was slated for closure, working well into next year and to create 500 jobs in Sault Ste. Marie.

Still, the use of credit creates jobs and economic opportunity in Canada, concedes Angus. Ultimately, that line of credit is paid back and can be used to establish new initiatives.

He suggests that loan guarantees provide the same results both here and in the republics, but at a reduced cost.

Cliff McIntosh of Quetico Centre says the presence of the old guard, with their command-economy management style, presents problems when a key aspect to overcome is the forced interdependence between the member republics.

The manufacturing of parts for a particular product was distributed throughout the USSR, making it extremely difficult for any one factory to go it alone.

McIntosh, Quetico's Linda Wiens and three American organizational development experts were invited to Minsk Byelorussia by the Byelorussian State University of Economics.

For two weeks in July McIntosh and the others met with management from Russia's largest truck manufacturing plant, a ball bearing plant, a watch manufacturer and a lingerie factory. In addition, they delivered workshops on organizational effectiveness to economics professors.

According to Angus, many of the Russian industries are years behind current technology, and most of the existing plants cannot be converted.

Another problem evident in Russia is that the infrastructure cannot support new development.

"Here is a backward economy moving from an industrial economy to a service economy. This is where the real opportunity is," predicts McIntosh.

"There is plenty of opportunity for investment in infrastructure," confirms Angus.

For example, Russia is building a port on its east coast, and is currently looking for engineering companies to bid on the construction work.

Electronics and telecommunications pose even greater opportunities.

There are a number of opportunities in agriculture, especially in areas of storage, crop techniques, manufacturing and processing for firms looking at international agreements.

In Russia there are 3,500 separate state-owned "enterprises" involved in grain processing. Ap-

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Title Annotation:Commonwealth of Independent States
Author:Brown, Stewart
Publication:Northern Ontario Business
Date:Sep 1, 1992
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