Overthrow endangers Md. business deals

August 20, 1991|By David Conn and Ted Shelsby

Two far-reaching Maryland-related business ventures that could be worth up to $16 billion are among the potential casualties of the overthrow of Soviet President Mikhail S. Gorbachev, state and private-sector officials said yesterday.

The initial stage of a six-year food-processing deal worth as much as $6 billion to U.S. companies and foreign nations and up to 200,000 jobs to the Soviet Union was signed last month by U.S. and Russian Republic officials, but it now is in doubt because of the events unfolding in Moscow, Maryland officials ,, said yesterday.

Meanwhile, a group headed by Westinghouse Electronic Systems Group and based near Baltimore-Washington International Airport is worried about the fate of its $10 billion program to upgrade the Soviet Union's commercial air traffic management system.

The group has contracted to modernize the Soviet air traffic control system, which in turn would open vast regions of Soviet airspace for the first time to commercial carriers from around the world. Other participants include American Telephone and Telegraph Co.; International Business Machines; Deutsche Aerospace of Germany; and Itoh, a Japanese company.

These companies, combined with the Soviet Union's Ministry of Civil Aviation, form a group called the Global Air Transportation System and Services, or GATSS. Its headquarters is in Linthicum, not far from Westinghouse's airport complex. Plans for the program were unveiled at a Washington press conference in March.

William Prater, a spokesman for IBM's federal sector division in -- Gaithersburg, said that it is too early to determine the impact of the political upheaval in the Soviet Union on the project. "We've been trying to call our counterparts in Moscow all day and we could not get through," he said.

He added that "the Soviet Air Ministry people haven't called us, ++ but that's not a terrific surprise, things are in such turmoil."

The food-processing project, unpublicized until now, was to send millions of pounds of canned food to the Soviet Union in January, most likely through the port of Baltimore, according to Warren Phillips, director of the Soviet-American Venture Initiative SAVI), a research and consulting organization at the University of Maryland's College Park campus.

Much of the food would have been purchased from processors and retailers in the Baltimore area.

The contracts for the project's first year were signed in early July by representatives of Riggs National Bank of Washington, a Georgia company called Protein Foods Inc. and the University of Maryland's Soviet-American Venture Initiative.

Next month, the Soviet Union's Russian Republic was to begin sending the first shipments of oil and other commodities to begin paying for the food and manufacturing equipment. The equipment would allow the Russians to begin building food-processing plants, warehouses and retail stores throughout the republic, Mr. Phillips said.

But the coup that overthrew Mr. Gorbachev has thrown the project, and many other business ventures, into a holding pattern of indeterminate length.

"I think that it is in limbo," said Mr. Phillips, who was planning until yesterday to fly to the Soviet Union Friday. "And I don't think the new government has any idea what it wants to do at this level for another 30 days" at least.

"Obviously when something like this happens everything comes to a screeching halt," Maryland Agriculture Secretary Robert L. Walker said. "Up until this news, there was enormous potential, albeit long-term," for doing business in the Soviet Union.

Indeed, Maryland companies were involved in, or negotiating for, everything from housing and urban development projects to television video deals and nuclear power plant simulator contracts.

Thomas Anaya, project manager for Rockville-based Argus Trading Ltd., just returned from Moscow Thursday after overseeing the three-month renovation of his company's new offices in a Moscow hotel. Argus sells metals, chemicals and equipment to make computer circuit boards and services Panasonic products sold in the Soviet Union. The company, which has annual sales of about $15 million in the U.S.S.R., is working on a deal to sell baby food in the Soviet Union, but Mr. Anaya said that the deal "remains to be seen."

Likewise, Roy Higgs, president of Baltimore-based D. I. Design & Development Consultants Inc., said that he believes that a pair of housing and urban development projects his company is helping design will be pushed back.

"But I am perfectly convinced that there is a great deal of business to be done in the Soviet Union," Mr. Higgs said. "There's no question you have to think in the long term."

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