Promoting American Business In Early Post-Soviet Russia
In the aftermath of the collapse of the Soviet Union, Washington DC native and Foreign Commercial Service Officer Karen Zens was assigned to Saint Petersburg, where she had studied some 20 years earlier. Tasked with aiding American companies entering the Russian market, she was thrown into a period of social, political, and economic chaos in a country still reeling from the sudden end of seventy years of Soviet rule.
Arriving in 1992 to a city that was immeasurably different from her student days, Zens was tasked with establishing an American business center, where U.S. businesses could engage with local officials in what was a newly decentralized and freewheeling economy.
“The old rules were thrown out, the new rules weren’t in place yet. Russians could now fraternize with foreigners and travel abroad and wanted to do both. It was the most exciting assignment I ever had. Things changed in front of your eyes.”
Karen Zens
“The old rules were thrown out, the new rules weren’t in place yet. Russians could now fraternize with foreigners and travel abroad and wanted to do both. It was the most exciting assignment I ever had. Things changed in front of your eyes,” she recalled. Initially setting up shop in what she describes as a “storage room with barely enough space for a desk and two chairs,” Zens eventually settled in what had been the library of a river cruise ship moored on the Neva River.
As she built a team of local staff to support American businesses, she realized it would take some patience. Russians were highly educated, but had never worked in a capitalist environment. “The poorest peasant in a third world country had more experience with a capitalist system than these otherwise well-educated Russians,” she noted. But Zens found that when they were given responsibility, recognition, and rewards – all lacking in the Soviet system – they were outstanding.
As Zens navigated the disorder of the new Russia, she soon ran up against less than refreshing roadblocks. Corruption flourished in post-Soviet Russia, as Soviet citizens had been taught to think of capitalism as “a license for greed and abuse.” She tried to choose her allies carefully, but nonetheless found herself advising companies on entering the market and then quickly turning to helping them deal with corrupt partners. “We would have to warn American businesses that their prospective partner might say the right thing, but they didn’t necessarily know what it really meant,” Zens explained. She recalled helping Subway successfully establish its first franchise in all of the former Soviet Union, only to have the Russian partner simply tear up the franchise agreement a year later, not seeing why he should continue to pay for the Subway name and expertise.
“Having been there in the Soviet period I could truly appreciate the strangeness of the time. When you ran into a Russian businessperson, or a government official, you never knew exactly what to expect, someone with a Soviet mindset struggling to understand the new way of doing things or perhaps a younger person who was maybe too comfortable with the ‘anything goes’ environment.”
“Our services were truly valuable,” she recalled, “because you were helping companies navigate a crazy period. We helped create American and Russian business partnerships. We hired wonderful people who were thrilled to have an interesting job where they were recognized for their work. Sadly, the Consulate in St Petersburg, including the Commercial Service, has now been closed. But we did make a difference for a while.”
