In the past several months, I have posted on these pages diary excerpts from my career doing business with Russia in the 1970s which will appear in Part III of my soon to be published book of Memoirs. I offer here a further “teaser” to convey the style and substance of the narrative.
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At several key junctures in my career, I made changes of direction which left colleagues, mentors, sponsors furious. I abruptly abandoned long developed plans and went off with scarcely an apology. Nor do I apologize now, because I see no alternative to the boldness and risk-taking that these moves signified. For the most part, the ships I abandoned sank before my eyes not long after.
One such turning point came in 1976 when I left an academic career that was stagnating on the launching pad and, to my mind, was running into insuperable problems of a market for entry level university instructors that had gone sour. A second such turning point came in the spring of 1977, when, after ten months working in a small marketing consultancy, I walked out, and together with the number two officer set up a new company to compete directly with my employer.
The third such case was in early 1980, when I abandoned an appointment as Project Manager within Chase World Information Corporation, a subsidiary of the Chase Manhattan Bank, which had been more than a year in negotiation and had introduced me to its chairman, David Rockefeller, when I was being vetted. And a fourth turning point came in 1987, when I opted out of ITT Europe, where I had been on the payroll since April 1980 and once again went off to start my own company, partly with the ambition of picking up a subsidiary or two that were being hived off in the downsizing that followed merger of its telecoms business with the French giant Alcatel.
Each of these career changes was formative in preparing the two focal periods of doing business in Russia that are the main subject of this book. Moreover, a certain agility in moving from employment to self-employment and back at the drop of a hat turned out to be a critically important skill in the 1990s. When I finally was based in Moscow, the business environment was highly volatile, and managers like myself who were hired from outside major corporations to fill a specific need in the company’s entry in the market were highly expendable. We were compensated accordingly, for which I have no regrets or rancor.
For my part, my abandoning an academic career was not irrevocable when I made it. I did not break off correspondence with a publisher over my proposed book on the Tsarist prisons system. And I told myself that my new direction might run for five years or so.
My sponsors at Harvard may have been resentful of my seeming apostasy. I think the word is apt, because in many ways the fraternity of academics was and surely is today a sort of religious order.
But as I maintained correspondence with some and as I rose in stature within Russian business in the 1990s, then attracting a lot of attention on campus, I was eventually invited back to the Russian Research Center to deliver a talk and share impressions of life inside the monster. Associate RRC Director, professor of economics at Wellesley Marshall Goldman was my main contact person and our paths crossed from time to time. At one reunion, I was introduced to outsiders by Ned Keenan as someone who ‘had gone straight.’
To be sure, at the moment of rupture in June 1976 my immediate peers among the aspiring new Ph.D.’s were envious and at times bitchy. For that reason, I told no one exactly who my new employer would be. One fellow RRC nestling who was sailing off to a junior faculty appointment at Southern Methodist University in Texas, a relative plum of a job at that time of meager pickings, took consolation in the fact that I would be earning in my business job virtually the same as he, around $12,000 per annum. Others said it was too bad I had not landed something in the banks, because that is where the big money was to be made.
Meanwhile, several friends from the graduate school years at Columbia remained with me for life. One, a Greek American who had done an excellent dissertation on French police control of public opinion during World War One, also could not get off the launching pad and was advised by his highly regarded faculty mentor, Istvan Deak, to consider leaving teaching because of the hopelessness of job placement. Yani eventually moved sidewise into university administration, where he remained to retirement. Another Landsman, Echeal Segan, moved across to publishing, where he got a coordinator’s position within the Great Soviet Encyclopedia translation project at Macmillan, from which he passed along some casual translation assignments to me. Echeal eventually moved to proofreading at Manhattan law firms. In short, many of my former classmates found jobs to pay the rent; few made careers. We stayed in touch and got together at intervals of several years forever thereafter.
Meanwhile, back in 1974-76 the rejection letters in answer to the dozens and dozens of applications that I made for vacancies in full time teaching positions all over the US and abroad, as far afield as the Australian Outback, wore down my nerves. With Who’s Afraid of Virginia Woolf on our minds, my wife and I asked ourselves whether we really would want to live in some of the awfully remote and presumably provincial locations to which I was applying and getting rejections.
In the face of these depressing realities, and considering the ‘publish or perish’ ironclad rule, I decided to turn a number of chapters from my dissertation into articles for the professional journals rather than hold out for the book that could take several years to see print given the also troubled state of the university publishers. Indeed, a string of my articles did appear very quickly and I was quite proud. I even went beyond the dissertation manuscript proper and prepared a ground-breaking essay on the 1906 reform of Russian censorship based on the cache of official Russian documents of archival nature that were in the Law School stacks; this was later published in shortened form in the Solzhenitsyn-backed émigré journal Kontinent. However, these achievements did nothing to help me secure a position. Nor did they endear me to my sponsors, who waited for the book.
But this is not the whole story. In general, coming back to Harvard as a postgraduate was an entirely different experience from what I had in the College, and not in the positive sense. The College was the apple of the eye of the University Administration. The graduate faculties in the arts and sciences were, by comparison, poor relations. Instructors were the intellectual proletariat. And the professorate was arrogant and remote. Social grace was not the strong suit at the RRC. Its director, Adam Ulam was a bear of a man both physically and by temperament. Other faculty was not particularly more outgoing.
Finally we put on our glasses, read the handwriting on the wall and decided to clear out.
The result of my redirecting my attention from university postings to the business world was stunning. I had spent the greater part of three years pursuing illusory opportunities at universities. In two months I found myself a job in boutique consultancy assisting blue chip U.S. companies to do major industrial projects in the USSR. My wife and I quickly moved down to New York City to an apartment that I rented on the Upper West Side just ahead of the first birthday of our daughter in August 1976.
How do I explain my newfound good fortune? First, by the ongoing American business interest in entering the Soviet market for which I had very relevant skills. And second, by the opportunism that guided the business decisions of the lady entrepreneur who hired me, as often is the case in small enterprises tightly controlled by the founder.
If I may expand on the first point, it bears mentioning that one of the key elements of Richard Nixon’s policy of détente with the USSR was for American business to develop broad relations with their Russian counterparts. The White House led the way. To be sure, 1976 was already a bit late in the game. Stories of deception and losses by the pioneering American companies had already graced the pages of the national business journals. And the passage of the Jackson-Vanik amendment to the trade bill by Congress in 1974 created a strong obstacle to improved commercial relations with the USSR insofar as this discriminatory legislation made normal commerce dependent on levels of Jewish emigration, a premise which the Soviets rejected publicly even as they compromised over it on the quiet. Nonetheless, there are always late comers to a party, and even as political relations steadily worsened as the decade wore on there were companies keen to make news and please their shareholders by succeeding in the big emerging market that the Soviet Union represented.
As to the second point, I owed the employment offer to personal chemistry between myself and the charming, strong-willed lady, Bettina Parker, who ran the shop. Here is one of the exceptions to my rule of Harvard having been an obstacle on my way in business. It was precisely my outstanding academic credentials which motivated her decision to take me on board, not because it spelled competence but because it had snob appeal for the captains of industry among whom she circulated. That and my willingness (read desperation) to accept a pay package that was at the level of clerical help, so as to get a foot in the door and, hopefully, justify a substantial pay rise six months down the road.
Parker Associates was a “boutique consultancy” in a qualified sense. Apart from Bettina herself, staff was limited to a handful of helpers. First among them was the “Vice President” Norma Foerderer who held the fort in the New York office, allowing Bettina to pursue her globe-trotting in the USSR, later also in China, and always in Chicago and U.S. Midwest more generally where many of her core clients had their headquarters. Norma oversaw the accounts and coordinated relations with the Soviet consulate and embassy over visa matters. She also coordinated translations, the printing of brochures and other work related to the presentations that clients made in Moscow.
Then there was the manager of Parker’s accredited office in central Moscow, Tanya Semenenko. The office itself was a rarity at the time and attested to Bettina’s extraordinary success in cultivating high officials of the USSR State Committee for Science and Technology, which at the time, in the 1970s, vied with the Ministry of Foreign Affairs and with the many industrial ministries for developing and controlling relationships with potential cooperation partners from among the world’s biggest corporations.
As you will note, Parker’s operation was run and populated by women. I was in practice the first male to be recruited. Meanwhile, the entire clientele and in particular the corporate backers who made of this tiny consultancy something of great commercial potential – were all male. Bettina’s physical presence and European charm opened all doors. She was a Dutch national who came to the United States for a business education and stayed.
An article in the London Sunday Times dated 9 February 1975 entitled “One woman’s way through red tape” set out very well what I saw up close sixteen months later:
“If you had glimpsed Bettina Parker snuggling into the collar of her mink coat at Heathrow on Wednesday afternoon, you could have been forgiven for guessing that film star Liv Ullman was trying to pass incognito. Nothing in her appearance, from lilac suede dress to diamond and sapphire rings, would have led you to think she was well-known in the corridors of the Soviet Ministry for Foreign Trade, especially as she is an American. But at 42 Mrs Parker is the doyenne of a specialised bank of people who smooth the way for western businessmen keen to wrest lucrative or prestigious contracts from the Communist governments….
Bettina Parker’s value to her clients lies in preventing strangulation by red tape and she is very unusual in having the approval of the system.”
Parker Associates was “associated” with America’s largest Public Relations and Advertising firm at the time, Burson Marsteller, which invested a substantial amount in her company equity and brought to her its manufacturing clients who wanted hands-on, customized assistance entering the Soviet market.
Though Bettina Parker’s short list of clients on retainer included a couple of manufacturing companies turning out steel products, most were in the food processing industry or agribusiness and had their corporate headquarters in the Chicago area, which is where my first business trip was made just three days after joining the company and starting going through the case files.
Why food processing? The choice of concentration was surely dictated by considerations of opportunities on both the U.S. and Soviet sides of the equation. As I later learned when I began reading closely Izvestiya and other Soviet media, including specialized journals, increasing the variety and improving the quality of food products available to Soviet consumers was a priority of the latest Five Year Plan. Special attention was drawn to this issue by the catastrophic harvests of the early 1970s which had given rise to a bilateral agreement with the United States regulating long term grain purchases. Insofar as grain was partly directed to animal husbandry, shortages also impacted beef production in the USSR.
The shortfalls had to be made up by importing meat, at still higher cost to hard currency reserves. These factors combined to put in the foreground of attention two ministries that previously were left in the shadows, along with Light Industry and consumer goods generally: the Food Ministry and the Ministry of Meat and Dairy. Meanwhile, in this period of the mid-1970s on, attention to food production finally put a spotlight on the vast losses the USSR was experiencing in bringing the harvest from the fields to the groceries and urban markets. Conservative estimates in the print media suggested this was in excess of 25%. It was due partly to lack of packaging materials, partly to lack of suitable refrigerated transport, and more generally to lack of vertically integrated supply chains. Incentives were not the issue: at each stage of production and processing they were ample, but none was aligned with what came out at the end – produce on store shelves.
Insofar as the United States was at the time the world leader in food production at a scale comparable to the USSR, it was entirely logical that U.S. industry was a first choice for seeking partners now that the Soviet government was prepared to invest substantially in the sector. At issue was both equipment and management knowhow. Moreover, the United States was the global innovator in food production. Consumers there had less concern with quality, more concern with quantity and with reduced prices than was true in Europe where demand was less elastic. For these reasons, the U.S. pursued new technologies, particularly in extension of meat products through substitution by soy proteins, a subject that Soviet researchers and production managers followed with great interest.
On the U.S side, Parker saw an opportunity to bring the conservative mid-Western agribusinesses to Moscow, given that by their nature, apart from grain traders, they were laggards in following Nixon’s urging to go out and do business with the Communists in the interests of state-to-state normalization of relations as well as good, old-fashioned profit.
I note here that the above explanation of the business model of Parker Associates is what I came to entirely on my own. At no point did anyone give me an overarching view of what we were doing and why. All that I was told related to Bettina’s personal rapport with the chairmen and CEOs of our client companies on the one hand, and her rapport with the leading personalities in the State Committee for Science and Technology on the Soviet Side, for whom her extravagant manner hit a chord in the Russia psyche.
To a certain extent, the whole scheme of turnkey industrial projects now seems quaint, a relic from the past when the Communist bloc was closed to Western investment. There could be no operating subsidiaries back then. There could not even be representative offices or agencies in the proper sense. All dealings with the capitalist world were at arm’s length. And yet, I have no doubt that in parts of the world today elements of what I describe here still are practiced.
If I may resume my narrative, to my good fortune, very early in my employment with Parker Associates, I participated, however modestly, in a Soviet turnkey industrial plant project that did go through to completion in December 1976 and brought substantial rewards to several of the players, including my employer, in terms of success fee. The project in question was the plant to produce the powdered infant formula Similac, which was a market leader in the U.S. and globally. The owner of the brand and the technology was and is Abbott Labs with its Ross Laboratories subsidiary in Columbus, Ohio. For the Soviet side, the commercial negotiations were led by the Foreign Trade Organization (FTO) Tekhnopromimport on behalf of the Meat and Dairy Ministry as end user.
Assisting the Abbott Labs project was my very first assignment at Parker which began just days after I came to work. On 5 August, I flew out to their production facility at the Ross Laboratories subsidiary in Columbus, Ohio, where I was acquainted with the whole manufacturing cycle and spoke with the engineers who had drawn up the papers that underlay the technical part of the offer. Then the next day I flew to Chicago, where I spent some time with the head of their legal team going over the principles of the contract and was taken in to see the boss.
In Part III of my book of memoirs, I reproduce my diary entry from this meeting with Abbott Chairman and CEO Edward J. Ledder. Several noteworthy points emerge from this account. First, it is clear that I was being “hired” to serve as the key Russian-English interpreter in their scheduled negotiations a month later, in September. They wanted a full translation of everything said at the table, not the selective translation they believed they had been getting from Parker’s Russian office manager. And after the meeting, they awaited my thoughts on what was going on. This is to say that from the very beginning my role was on a sliding scale in the direction of genuine collegiality and consultancy. Secondly, I point out that I was taken to the CEO directly in what was intended to be a real vetting, not some mere protocol formality.
As it further developed with other clients of Parker and then later with all of my own consulting clients, I was always working with top corporate officers because they were the ones who had taken possession of the Soviet projects, from which big things were expected.
Succeeding at this level assumed a high degree of self-assurance and poise. In this regard, my experience as ‘a master of the universe’ in my undergraduate years at Harvard College served me well, far better than my time among the academic proletariat as a postgraduate fellow.
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A word is in order on the milieu in which I operated during my Parker apprenticeship, as well as during the follow-on years when I was captain of my ship. First among these was that the Soviet Union was in the 1970s an intimidating place, where we foreigners were under constant surveillance. I understood this right from my very first visit to Parker’s offices in Moscow. None of our staff were what they appeared to be. The two drivers attached to the office, Yuri and Volodya, seemed at first acquaintance like pets. They jumped at Tanya’s instructions. They did shopping for the kitchen and spent relatively little time behind the wheel. The whole arrangement bore a resemblance to the archaic Russian nobleman’s establishment with a steward (Tanya), the two coachmen, and a cook (Vera) at the ready.
However, as I detected one evening, one of our drivers stood guard outside our building; and he slinked away after I spotted him. For her part, Vera acted the simpleton, but that was pure deception. Her questions about the States were too well focused, her literary tastes too well defined for her to be a cook pure and simple. On the whole, I felt I could live with them by throwing out tidbits of information along the way for them to report onwards, by taking their orders for jeans, and by not letting on I knew they knew too much.
The same dance of tarantulas went on with respect to my ‘regular’ drivers hired from the Service Bureau of the Hotel Intourist, where I was installed during most of my trips for Parker. Proof positive of my suspicions came after I left Parker and returned to Moscow several months later as the head of my own business delegation. As my client and I passed in front of the Intourist, one of these former drivers got out of his car and greeted us, proposing to take us on a free of charge excursion around the city, all the better to overhear our conversations and, surely, have material to file.
Agents provocateurs and spies are one thing. The potential for physical violence was also never far off as I was reminded on one of my early trips to Moscow for Parker when I got to know several members of a Finnish youth group who were staying in the same Intourist Hotel as I. One of their group had his front teeth knocked out by an unknown Russian assailant in the hotel elevator. His attempts to file a complaint with the police were not accepted. What exactly had prompted this I had no idea, but that it was a sinister warning to stay alert and to keep one’s nose clean was certain.
It was years later when I read Martin Cruz Smith’s 1981 suspense novel Gorky Park that I found the sinister atmosphere in Moscow of the second half of the 1970s perfectly captured. Moreover, by skillful casting in the movie, one of the villains, the American businessman (here a fur trader), John Osborne, was played by Lee Marvin, who bore an uncanny resemblance to the most featured American businessman in the days of détente, Pepsico’s chairman Donald Kendall. This match never left my mind, although in real life I was an active participant in Kendall’s various undertakings to rally business on behalf of normal relations with Russia and had occasion to see him up close, as noted in a diary extract of Part Three.
Nonetheless, I emphasize that until the very end of détente in 1978, whatever notion we had of possible threats to our personal welfare while on Soviet soil, the authorities did not touch a hair on the head of American and other foreign businessmen. That changed with the arrest of F. Jay Crawford, one of International Harvester’s service technicians in Moscow in June 1978 on charges of currency speculation. He was thrown into the infamous Lefortovo Prison where he was held incommunicado for two weeks. Following representations from the business community and from American diplomacy, Crawford was released and expelled from the country. But this stark change in direction in relations sent a shiver down the spine of all of us engaged in Soviet trade.
©Gilbert Doctorow, 2020
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