MOSCOW -- A preliminary survey of damage to U.S. companies doing business here shows that selected companies have reported more than $400 million in losses because of the economic collapse. The actual figure is bound to be several times higher.
Hardest hit were companies in the financial sector and those that sell commodities -- principally food -- to Russia, according to Scott Blacklin, head of the American Chamber of Commerce here.
Without a functioning banking system or a realistic exchange rate for the ruble, he said, the companies are unable to do business.
"It's safe to say," he said, that U.S. business losses stemming from the month-old crisis are in "the billions of dollars."
U.S. meat exports to Russia, for instance, totaled about $100 million in the first half of the year, with most categories more than doubling over the year before. Now, virtually no U.S. meat is entering Russia, Richard Ali, of the U.S. Meat Export Federation, said in a telephone interview from London.
Maryland poultry sales to Russia are off about 50 percent in recent weeks, the Maryland Department of Agriculture reported this week. Russia is the largest market for Maryland's chicken exports, which totaled $90 million last year.
As Russia's economic system approaches paralysis, a group of international bankers met in London yesterday to consider a response to the default in August and a plan announced this week by the Central Bank to buy back some of its bad debt -- but from Russian banks only. One course being considered is the seizure of Russian assets abroad.
Hoping to head that off, the new deputy prime minister, Alexander Shokhin, said yesterday that the government might reconsider its default and try to negotiate a debt restructuring in its place. He acknowledged that the original decision amounted to a confiscation of investments.
Moscow's credibility at the moment could hardly be lower. A month into the crisis, there is no functioning government fully in operation. The Central Bank is talking about printing rubles while Shokhin says that would be impossible. The value of the ruble has been swinging widely in what appears to be manipulation solely for the benefit of Moscow's banks.
The banks needed millions of dollars to pay off futures contracts Tuesday at predetermined rates of about 7 to the dollar, and the ruble strengthened Tuesday to just about 7 from its previous low of 20. It saved the banks, but it was so artificial that no one at street-side exchanges was willing to trade at the official rate. In the two days since, the ruble has plummeted like a stone, to 14.6 as of this morning.
Andrei Illarionov, an economist who has been sharply critical of the government, accused the Central Bank yesterday of conspiring with the commercial banks on the ruble rate.
"This is the most flagrant, cynical and brazen, I would say, subsidy, made available with national currency reserves to concrete commercial structures," he said.
Blacklin said a survey of the 495 member companies of the American Chamber of Commerce had revealed "a profound break, a psychological break, in the former belief in Russian reform."
"We, all of us, believed in the reform process, believed real progress was being made," he said. "It turns out we were wrong."
Blacklin, former head of the international division of Maryland's Department of Business & Economic Development, said that even today decisions are being made in corporate headquarters around the world about further investment in Russia. It is unlikely there will be any investment, he said, unless the government starts trying to repair its reputation.
"It is clear that the Russian government does not have the credibility necessary to maintain an attraction for foreign capital," he said.
The destruction of that credibility, he said, makes this crisis significantly different from others in Russia's often rocky progress away from the Soviet system.
The United States is the largest direct foreign investor in Russia, with about $4 billion or 35 percent of all investments here. That is not a large amount. Hungary, for instance, has five times as much foreign investment as Russia.
But, if anything, U.S. investment is likely to decline here. Current projects will probably proceed, Blacklin said, but new ones are unlikely.
"In some ways," he said, "this community feels it has been hit by a neutron bomb, and we've all been irradiated. Today we're all alive, but in 30 days, 60 days, 90 days, some will die. The rest of us will recover, but we'll have to lay around and throw up for a while."
Some U.S. companies have laid off up to 75 percent of their local staff.
Of 40 companies that have more than $1 billion gross worldwide revenue surveyed by the chamber, 70 percent have been unable to get at money in their Russian bank accounts; 70 percent have had problems collecting money from customers; 35 percent have had problems paying suppliers; and 33 percent have deferred salary payments.