January 23, 2003
Expats Trapped In Visa Backlog
By Alla Startseva and Nabi Abdullaev
Scores of Western business executives are stuck without visas after recent changes to the visa system created a huge backlog that threatens to undermine investor interest in the country.
Major foreign companies said the long wait for visas for executives returning to Russia or flying in on business trips is already hurting their business strategies for the year.
The backlog started Nov. 1, when a new law on foreigners came into force that moved the processing of visa invitations from the Foreign Ministry to the Interior Ministry's passport and visa agency, which is known by the acronym PVU.
Eleven weeks after the law went into effect, the PVU has yet to get its act together, foreign companies said. In one example, about 20 IKEA executives have been stuck in Sweden since the New Year holidays due to delays in the processing of their invitations.
"For several weeks after the law went into effect on Nov. 1, the Moscow city PVU could not tell us exactly what we had to do," said Irina Vanenkova, spokeswoman for the Swedish furniture chain. "We were only able to submit our papers in mid-December.
"No invitations for our stranded staff were issued today, and we are being forced to work without some of our top managers and designers," she said Wednesday.
Before November, it required only a few days to get an invitation; a company simply had to fax a letter with the request to the Foreign Ministry's consular department. Now, a company has to hand-deliver a notarized request to the PVU.
IKEA complained that the PVU works short weeks and that there were days when IKEA representatives have showed up at the PVU hours before it opened -- and still didn't manage to get inside before closing time.
"It is so Soviet," said the spokesman for a major Western food company, speaking on condition of anonymity.
German retailer Metro Cash & Carry said one of its representatives arrived recently at the PVU before it opened and was told that she was 186th in line.
"We are very disappointed with the new system," said Metro Cash & Carry spokeswoman Yulia Belova.
"In our opinion the PVU lacks the experience, personnel and technical infrastructure to carry out their task," she said. "This all leads to the delays of important meetings, shuffles in company plans and the postponement of decisions -- all of which have a negative impact on the efficiency of the company."
PVU refused to discuss the situation Wednesday, and faxed requests for comment went unanswered.
Companies said that time is the main problem because it is impossible to plan urgent business trips to Russia three weeks in advance, the period in which the PVU promises to process invitation applications from abroad.
Procter & Gamble said that under the old regulations it used to take no more than three days to obtain a single-entry visa for an employee or a business partner coming to Moscow.
"But now we have to wait for three weeks," said company spokesman Georgy Saustin. "And we anticipate bigger difficulties in the future when we will need to extend or get new visas for our staff."
Alarmed by the negative impact the new regulations are having on Swedish companies, Swedish Prime Minister Goran Persson raised the issue with Prime Minister Mikhail Kasyanov at a meeting of the Barents Sea Council in Kirkenes, Norway, on Jan. 11.
Sweden's ambassador to Russia, Sven Hirdman, said the visa changeover was baffling for investors.
"IKEA is a major buyer of Russian raw materials and has several large stores here. IKEA's expatriate personnel just don't understand why there is any delay at all in issuing their invitations if they are contributing to the Russian economy," Hirdman said.
Many foreign entrepreneurs came in Russia in the 1990s because they were attracted by liberal regulations for hiring qualified Western personnel that then-President Boris Yeltsin authorized in a 1993 decree, said Sergei Melnikov of the law firm Your Lawyer.
Foreign investors have invested millions of dollars because they felt comfortable knowing that the funds were going to be put to use by loyal expatriate staff in Russia, he said.
"The new legislation thoughtlessly puts these people on the same level as unwanted cheap labor, and it will inevitably have a negative effect on Russia's ratings among investors," he said.
As an example, Melnikov said one of his clients was a Finnish businessman who set up a company in Moscow in 1995 and for years successfully traded furniture without obtaining a work permit. Last year, Russian customs officials seized a shipment of furniture, demanding that he show a work permit to get it back.
The paperwork took 10 weeks, and the Finn had to pay storage fees to customs and cover damages suffered by his Russian clients, Melnikov said. After seven years of work in Russia, the businessman went bankrupt and had to return home, he said.
Sergei Stefanishin, a lawyer with the Bech-Bruun Dragsted International law firm, said government bureaucrats were at fault for the visa backlog.
"There were three months between the law's adoption in July last year and its going into effect in November, and the government should have worked out all procedures during that period," he said. "Instead, regulations on issuing temporary residence permits, rules for issuing work permits, quotas for guest workers and many other matters were left in limbo."
It is not only stranded expatriate executives who are feeling the strain. At least one nightclub manager blamed the backlog on a drop in customers.
"January didn't start as good as it used to, and we are sure it is because of the new visa regulations," said Stefan Smideborn, general manager of Night Flight club.