Twenty‑first Century historians will record the unfolding events of the 1990s in Europe, the USSR, and the East Bloc satellites as some of the most significant and dramatic changes in political and economic history. Even the best prognosticators failed to predict the rapidity and/or the cascading of recent events ‑ the tearing down of the Berlin Wall; the USSR obtaining the opportunity to become a Most Favored Nation (MFN) for export and import with the world's major traders; the rapidly declining membership in the Communist Party of the USSR in the magnitude of forty or more percent; the signing of the very significant arms reduction treaty (START) and the eventual removal of USSR troops from East Bloc countries; attendance by the USSR at the meeting of the G‑7 where requests were made for International Monetary Fund membership, and economic development loans. (The USSR almost proposed a Marshal Plan for themselves.) 

In July 1990, an official delegation from Stevens Point visited the small rural community of Rostov‑Veliky, Yurosalvl region, Republic of Russia, the USSR. Rostov-Veliky is very similar to Stevens Point and even in some respects to Marshfield. The city population is about 30,000, the main economic sector is agriculture with a mix of light manufacturing and service industries in the community. Rostov‑Veliky can provide city type services to most households, e.g. sewer, water, lights, streets, police and fire as well as central heat through a steam boiler system. Residents live primarily in Russian style state owned apartment buildings constructed in the last thirty years, although private ownership of single family homes is possible. In the rural areas single family homes are the norm. Other similarities with north and central Wisconsin are the weather, with even longer and colder winters (Rostov‑Veliky is 120 miles north of Moscow which places the city about on line with Anchorage, AK), pine tree forests, and the popularity of hunting and fishing. 

There are many more dissimilarities among Rostov‑Veliky, Russia and the USSR in general than there are similarities with the U.S. in particular. These differences strongly speak to significant long term problems in the USSR economy's transition from Soviet Communism and central planning to a more open, democratic entrepreneurial style economy similar to the U.S., the twelve countries of the EC (European Economic Community) or even Japan, Mexico or Canada. 

Four differences, which are seemly insurmountable in the short run, are the major deterrences to rapid economic change as well as political and social progress: (1) transportation infrastructure; (2) currency convertibility and banking/lending practices; (3) entrepreneurial spirit suppressed by years of Communism and central control and planning; and (4) general distrust of the government, yet, ironically, a strong psychological dependence on the state. These four conditions are pervasive in the USSR. 

My perspective is the result of reading and limited personal observation. The visit to Rostov‑Veliky was for ten days and was quite controlled in many respects. Nevertheless, the team enjoyed freedom of movement and conversation not previously experienced by visitors to the region, exemplefied by attendance at an open religious service. 

Politically, Russia is but one of fifteen republics or political regions in the USSR currently seeking a high level of independence from the central government. Russia is the largest republic, many times larger than the next largest republic. Russia is also the wealthiest by almost any measure including raw materials, technology, industry and education of the population. Ethnically, Russia is much more heterogeneous than the bulk of the USSR, but like the rest of the Union suffers from significant levels of distrust among many of the nearly seventy major ethnic groups in the USSR. Multiple languages, religions and politics as well as cultural heritages accent the many marked differences found in this massive albeit rather weakened union today. 

What follows is a liturgy of observations that describe the perils of economic and social reform for one small community in northern Russia, USSR. 

The first elected city government, a mayoral form with a city council, took office in March 1990 (the President of the Council is the sub‑region head of the KGB). The first visit by any delegation from Rostov‑Veliky to the U.S. or Wisconsin, official or not, took place less than three months later and was lead by the newly elected mayor. Despite their awe at the size and distinctiveness of our typical single family homes, our ownership of businesses generated the most questions. While we were visiting in Rostov‑Veliky our group was again constantly asked about private ownership, entrepreneurship in general, financing, etc. 

The road network from Moscow to Rostov‑Veliky, in and around the community itself and in the region in general, is insufficient in size and condition to support major movement of goods and services. The rail system is primarily used to move passengers. Thus the number as well as availability of cargo transports is insufficient for current industrial production. The movement of goods and services is limited geographically even in the well developed areas such as Moscow or Russia. There is not an effective interstate or regional road system. The trucking industry is limited mainly to straight bed vehicles. The condition of the roads and hauling equipment is, at best, at the level the U.S. had in 1960, but more often that not, at our 1950s standard. Frankly, it seems that the information about Russia's modern fleet of commercial and agricultural equipment has been grossly overstated. 

Industry in general is operating with marginal, old equipment. Visits to textile, optics, and other factories revealed many instances of fifty year old technologies and organizational structures. State owned and/or controlled facilities still have "worker elected" and state verified management including the CEO and COO equivalents as well as senior union leadership. Leadership is shared among the triad. Worker buy‑outs similar to ESOPs in the U.S. are probably not viable given the lack of financing availability. The more serious problem with private ownership is the lack of experience in planning, either tactical or strategic, since most of the planning functions have been centralized. 

If the State wants it ‑ the State will do it! The economy has operated for decades with State control. Production as well as distribution orders are still state directed for most industries. Private enterprise was not completely suppressed, but generally was limited to agricultural commodities, small scale construction, and garage or basement activities. State owned and managed housing is an example of the problems of modernizing to a Western style economy. Apartments visited tended to be very small by U.S. standards, but reasonably well maintained within the capability and financial status of the owner. Common areas were tenement style, i.e. dirty, poorly lit, lacking in obvious maintenance and the grass cut only if the cow needed feeding ‑because, "if the State wants it fixed (or maintained) ‑ the State will do it!", since the State owns it. 

Distrust of the bureaucracy is not uncommon in any community, but it is highly developed in the USSR. Shadows of the KGB, compulsory military service, the gulags, widespread shortages of essential goods and services, are hard to eliminate. On the other hand, there is a significant number of persons who materially benefit from participation in government activities. They receive cars and better food, nicer apartments and other amenities of life, better incomes, retirement opportunities and the like. A change to a market driven economy and more political freedoms certainly are a threat to many of those currently living from the fatted calf. 

If one were to evaluate the likelihood of immediate, general and positive economic reforms in the USSR, the one word, unlikely, seems the word of choice. However, with the loosening of State controls, communities like Rostov‑Veliky should be developing the most rapidly. Rostov‑Veliky appears to have many of the necessary tools to incubate entrepreneurial activity: (1) there is a clear and visible sense of community pride, at least at the leader level; (2) the city has nearly nine hundred years of history, e.g. was one of the key locations in the evolution of the Russian Orthodox church and today is leading the regional resurgence of the church and religious freedoms; (3) Rostov‑Veliky is located in a potentially rich region (agriculture, tourism, manufacturing, etc.), (4) there are individuals with a strong desire for reforms in key political and industry leadership positions, and finally (5) the community leaders are aggressively trying to establish joint ventures with businesses outside the USSR. 

On the downside, one must wonder if the ardor of aggressive economic reform in communities like Rostov‑Veliky will dwindle. The immediate problems are: (1) the loosening of State controls is too slow; (2) outside investors continue high levels of caution given restraints on the recovery of profits, the lack of local investment hard currencies and recessionary and other economic pressures (i.e. spending in Germany on integrating E. Germany); (3) locally produced goods (some services) are not readily exportable because of low quality, a lack of an integration of state of the art technologies, an inability to produce in exportable quantities, and, (4) a poor distribution and transportation system throughout the USSR. 

The following is an example of the problems facing communities like Rostov-Veliky. Consider the recent crop crisis. The USSR in general was starving for wheat, a dietary staple. In 1990 the region around Rostov‑Veliky (Yurosalvl Prefecture) had a record wheat crop which was poorly harvested because of state control, bickering and insufficient availability of harvesters, trucks, fuel, protected storage sites and willing workers. The workers argued that were the crop actually harvested, there was no effective distribution system to insure the most needy areas would receive the crop. Probably two‑thirds of the record crop either rotted in the fields or at inadequate storage sites. The U.S. stepped in and "sold" cheap wheat to the USSR. It seems that delivery of smaller quantities over a longer period, to multiple ports, was easier to handle than was their own terrific crop. To conclude on a positive note. Three Stevens Point entrepreneurs are so impressed with the potential for investment in Rostov‑Veliky that they will put up most of the capital to construct a tourist hotel and other facilities plus arrange tourist exchanges. The U.S. ownership will be forty percent. Rostov-Veliky owners are investing time, construction technology, the property (an old building downtown), local materials and sweat equity for sixty percent ownership. There have already been exchanges of tourist groups, teachers and some low level technology, all in little more than one year since the first official exchange visits. No one expects the Stevens Point ‑ Rostov‑Veliky interface to have the high level visibility of a Moscow McDonalds or the bartered swap of Pepsi for vodka. But those two food giants have no more guarantees of profitability or even partial recovery of their significant long term investments than do our local investors. What is clear is that there are definite pockets of potential profitability for U.S. investors. The psychological rewards, however, are infinitely greater as we witness a long protected, frequently suppressed and sheltered people emerge (albeit ever slowly) from decades of oppression, misinformation and political control.