#4
Moscow Times
November 14, 2002
Editorial
Siege Sends a Message to Investors

Hundreds of U.S. and Russian political and business types are gathering at Harvard University on Thursday for the latest on the annual merry-go-round of conferences devoted to investing in Russia.

One of the keynote speakers is German Gref, the economic development and trade minister, who if last month's U.S.-Russia Business Council conference in Washington is any guide can be expected to list the government's achievements and promise that everything is being done to make Russia a good place to do business.

Gref has a right to be proud, and there's no reason to doubt that he believes what he says, but investors need look no further than the government's handling of last month's hostage crisis to see some of the obstacles they still face.

The government's approach to freeing the roughly 800 people held hostage at gunpoint in a Moscow theater says far more about its ability to function in a coordinated manner and its commitment to accountable, open government than all the talk about the rule of law and the vertical structure of power.

The day the siege was ended, we saw the successful execution of a plan to gas the theater and send in FSB special forces to eliminate the Chechen hostage-takers. But then we watched in agony as limp hostages were carried out of the theater and dumped in buses and ambulances. Dozens were dead by the time they reached city hospitals.

Why, we wondered, were there so few medical personnel on the scene and why were doctors so unprepared? Why were they not told what gas was used?

As Sergei Parkhomenko, the editor of Yezhenedelny Zhurnal, spells out in this week's magazine, the job of caring for the freed hostages had been left to city authorities, but they were never briefed, even in the final hours, on what kind of operation to be ready for.

City officials said they prepared for several possible outcomes, from a bloody firefight with many wounded to an explosion destroying the theater and burying hundreds under the debris, but they learned about the gassing operation only after the fact.

This all may seem to have little bearing on how business is done, but investors should take note, because an absence of coordination between government agencies and between federal and local authorities, ambiguity regarding agencies' roles and responsibilities, and a low level of accountability pervade the government as a whole.

It is this, the importance of open government and administrative reform, that investors should impress upon Gref and Co. in Boston and here at home.

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