Monday, Jul. 31, 1972

Stampede to Moscow

PRESIDENT Nixon's summit trip to Moscow in May could well be remembered by American businessmen as a visit of Perryesque proportions. It has already helped net a record $750 million sale of U.S. grains to the Soviets, and Yankee traders of practically every political persuasion are calculating how they might profit from the "opening up" of that great, unexplored Soviet market. Last week two capitalist corporations scored important, and potentially spectacular gains in U.S.-Soviet exchange. In the process, one of them set off the first old-fashioned Wall Street stock sizzle ever caused by a deal with the Communists.

Behind the uproar was a man who thoroughly enjoys the attendant headlines, Dr. Armand Hammer, 74, chairman of Los Angeles' Occidental Petroleum Corp. A nonpracticing physician who made a fortune swapping U.S. wheat for Russian furs, caviar and art treasures in the post-Revolutionary famine of the '20s--and never lets anybody forget that he became an acquaintance of Lenin's--Hammer has kept up his ties with the Soviet hierarchy over the years. "From time to time the Russians have invited me to come over to talk about a trade agreement," Hammer told TIME New York Bureau Chief Marsh Clark. "When President Nixon went over and effected a rapprochement, I felt the time was ripe to go."

Hammer and a nine-man team that included Holiday Inn Chief Kemmons Wilson, who is talking about opening a 400-room inn in Moscow, spent four days negotiating with officials of half a dozen Soviet ministries. The outcome was what both parties labeled a five-year "agreement on scientific and technical cooperation." It calls for exploring the possibilities of joint ventures in the Soviet Union involving oil and gas production, the manufacture of agricultural fertilizers, metalworking and hotel construction. With effusive thanks to what he described as his simpatichny Soviet hosts, the Russian-speaking Hammer elatedly flew to London --where he also picked up a drawing by Leonardo da Vinci for his vast art collection--to announce his coup.

Technically, the Occidental deal thus far involves only the exchange of expertise--management advice, patents and the like--but it could lead to a large trade of American machines, materials and capital for abundant Soviet oil, gas and nonferrous metals. Occidental, which took a financial clobbering when new and lower export quotas were slapped on its oil concessions in Libya, may have some trouble raising the capital needed to build the kinds of projects that U.S. concerns are especially interested in, notably a pipeline from the Western Siberia gas fields to an Arctic port. But other firms are by no means excluded from future negotiations; Gulf, Tenneco and others have also been dickering with the Soviets. Nonetheless, Hammer played his agreement for all it was worth.

U.S. investors must have thought that the figure came from Brezhnev himself. In three days of frenzied trading, Occidental's stock shot up from 11 7/8 to 18 1/4. Then the puff turned into poof. Arriving in Moscow for major trade talks, Commerce Secretary Peter G. Peterson said of the Occidental agreement: "It is premature to call it a commercial deal." Occidental's stock promptly dropped to 15 1/2 and closed the week at 15 1/4. Even so, President Nixon, who favors joint ventures between U.S. and Soviet enterprises, summoned Hammer upon his return for a private 45-minute debriefing in the White House.

Normalization. The second mark of progress in U.S.-Soviet trade was made by Pullman Inc., which reported that it had become the first American industrial company to get permission to open an office in Moscow.* The Chicago-based company will be entitled to hire Soviet staff members and keep three U.S. employees in Moscow. Pullman has sold designs for five ammonia plants to the Soviets, and last December its Swindell-Dressier division won a $10 million contract to design the foundry of the huge new Kama River truck plant in the Tatar Republic. Says President Samuel B. Casey: "We expect to do a lot more business here."

So do other U.S. businessmen. Many will probably have to wait for a further normalization of trade relations between the two superpowers, including congressional action to lower tariffs on Russian goods by granting most-favored-nation status to the Soviets, before their prospective deals can be clinched. Yet the stampede of American salesmen to Moscow after Nixon's visit, and their uniformly cordial reception there, is a convincing testament to the farsightedness of those in both nations who have said for years that such trade could be mutually profitable.

*Besides news-gathering agencies, the only other U.S. concerns with Moscow branches are Pan American World Airways and American Express.

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