Live

Watch CBSN Live

The Russian Economy Blues

The faltering economy in Russia is bad news for American companies that hoped 150 million Russians would see the end of communism as the beginning of consumerism. CBS News Correspondent Rita Braver reports.

Chicken parts, for example, became the leading American export to Russia. Bill Roenigk of the National Broiler Council dismissed earlier warnings of trouble.

"We thought the economy was going to turn around, was going to start to build, not that it was going to be easy, but it was going to come along quicker than we've seen it," said Roenigk.

That optimistic view was a natural response to upbeat predictions by Western political leaders.

"Russia, once looked at closely, turned out not to be at all what it had been portrayed as," analyst Clifford Gaddy of the Brookings Institute said.

But Gaddy says that there is no need for American businesses to pull up their stakes.

"The first inclination of corporations -- U.S. corporations that are involved in Russia -- is to try to lie low. That is, you don't commit more right now, but you don't pull out immediately," Gaddy said.

Most American companies are not expected to chicken out.

"I think they are saying, this is a difficult time, this is a problem, but Russia is not going to sink. The U.S. government, the International Monetary Fund, other organizations cannot allow Russia to sink, they are going to keep it afloat," said Roenigk.

And, with President Clinton about to visit Russia later this month, White House advisors are already meeting to figure out what he will say, or do, in response to the Russian financial crisis.

Reported by Rita Braver
©1998, CBS Worldwide Inc., All Rights Reserved