(FORTUNE Magazine) – LIKE AMERICAN and Soviet satellites docking in space, a consortium of five giant U.S. companies has joined up with a unique organization drawn from a cross section of the Kremlin's economic bureaucracy. The purpose is not astronauts' handshakes in the sky but down-to-earth profits from perestroika. The Yank contingent -- Chevron, RJR Nabisco, Eastman Kodak, Johnson & Johnson, and Archer Daniels Midland -- talks of setting up at least 25 joint ventures. James H. Giffen, an American middleman who sold the consortium idea to Moscow, expects it to generate American investments of $5 billion to $10 billion over the next 15 years. Dwayne Andreas, chairman of Archer Daniels Midland and an old Russian hand, is so upbeat that he wants to buy real estate -- the vacant new U.S. embassy building in Moscow that's riddled with KGB listening devices. This surge of enthusiasm for President Gorbachev's economic reforms recalls the earlier hopes that attracted U.S. companies into China. The similarities are uncanny: a large country craving everything from toothpaste to computer disks, and officials who court Western investment and even sound like Deng Xiaoping -- before the recent massacre of Chinese students. To which can be added an incredibly challenging business environment with some special Soviet < twists. The grossly overvalued ruble -- it fetches $1.60 at the official rate and 10 cents in back streets -- is not freely convertible. To repatriate profits, foreign investors must somehow earn hard currency. Eugene Theroux, an attorney in the Washington office of Baker & McKenzie who specializes in dealing with Communist countries, calls a joint venture in the Soviet Union ''one of the most ambitious undertakings on earth.'' So far the members of the American consortium have put up hardly any cash, and only 40 U.S. companies in all have agreed to invest in the U.S.S.R. Yet they are betting that Gorbachev's reform effort will last long enough to revive a stagnant, inflation-ridden economy. They see the U.S.S.R. as an irresistible long-term play. Its per capita income averages $3,000 annually -- more than ten times China's -- and Soviet pockets are crammed with rubles because there's little to buy. Jan Vanous, research director of PlanEcon, a private Washington research group specializing in the Eastern bloc, best sums up the impulse of large American corporations: ''They're betting this economy will turn around in a decade. It's like buying an option. If nothing happens, they can afford to write it off.'' Spurring them on are worries that Western European rivals will beat them into the Soviet market. ''The competitive rush is on,'' says Andreas, ''and the U.S. is far behind.'' The American presence is growing nevertheless. Six U.S. corporations have formed a health-care combine, while other companies are expanding independently and striking out for the steppes on their own. Soviets have been able to quaff Pepsi-Cola for years but soon will be able to munch Big Macs. Says George A. Cohon, president of McDonald's Canadian subsidiary and organizer of a deal for 20 golden-arch outlets in the U.S.S.R.: ''We're living all the things you hear about perestroika.'' So is Combustion Engineering, the first American corporation to form a Soviet joint venture. This year it expects to make a profit assembling instruments and controls for the oil- processing industry in Nizhnekamsk, 600 miles east of Moscow. ONE AMERICAN who stands to make big money from all this is Giffen, 48, who recruited the five corporate giants and acted as go-between with the Soviet government. Operating out of a Manhattan office in the Seagram building adorned with autographed photos of Soviet leaders, he charges fees that could mount into the millions if the joint ventures work out as planned. The U.S.S.R. already has preliminary commitments under which the U.S. companies would turn out such products as Ritz crackers, Winston cigarettes, and Kodak blood analyzers for hospitals. ''Without Giffen,'' says Andreas, whose own company plans a wheat-processing venture, ''it couldn't possibly have happened. The Soviets trust Jim because he has always been fair with them.'' He has long been preparing for this opportunity. Using research that he started while a law student at UCLA, Giffen wrote a 1968 textbook on doing business with the U.S.S.R. Joining Armco in 1973, he helped peddle oil- drilling equipment to the Soviets. In late 1979, Giffen signed a letter of intent for Armco and Phillips Petroleum to develop oil in the Soviet Union. Then, after two years of negotiations, he closed a $353 million deal under which Armco would build a plant to make steel for electrical transformers. But these deals got blown away by the icy winds of the revived cold war. Within a few weeks the U.S.S.R. toppled the regime in Afghanistan and, Giffen says, ''all that work went out the window.'' Nonetheless he went on cultivating high-level contacts in Moscow. In 1984 he set up Mercator Corp., a private merchant bank, and also became president of the U.S.-U.S.S.R. Trade and Economic Council, a nonprofit organization dating from the detente era. Wearing his council hat gave Giffen extraordinary access to Soviet policymakers just as perestroika bloomed. Giffen and Andreas, who is the council's American co-chairman, met Gorbachev before he emerged as supreme leader. As Giffen tells it, Gorbachev later enlisted him to attract U.S. corporations for joint ventures, and that inspired the consortium idea. At times the ebullient Giffen gets carried away by the consortium's potential: ''The whole concept was to pick blue bloods that hadn't been associated with U.S.-Soviet trade, conservative companies that would act as a catalyst for the entire business community.'' He claims to have told the Soviets, ''You make them profitable and you'll start a gold mine.'' In fact some corporations have spurned Giffen's services, yet gained terms similar to those that the consortium members supposedly enjoy on an exclusive basis. The initial agreement setting up the American Trade Consortium, as the five- company group calls itself, was signed in Moscow in April last year. One innovative feature devised by Giffen is designed to overcome a Soviet requirement that foreign investors must earn hard currency before they can take profits home. Exports by one company will generate hard currency that the others can use to remit profits or bring in raw materials or consumer goods intended for sale in Soviet shops. Giffen expects Chevron to supply dollars to the consortium by exporting Soviet oil. Says Edward B. Scott, vice president for negotiations and contracts at Chevron: ''Giffen provided an idea that made the consortium members depend on each other.'' Robert J. Carbonell, chairman of RJR Nabisco's Del Monte Foods and of the consortium, says that it has also hurdled ''an impossible situation'' in dealing with the Soviet government. Previously most U.S. companies dealt with only one ministry but got nowhere with the rest of the bureaucracy. Giffen persuaded Moscow to form its own consortium of all the senior bureaucrats required for joint ventures, and to work with his group. By bargaining for a year, the American consortium has established an umbrella agreement on taxes, labor costs, and foreign exchange. Says Vladimir A. Drovosekov, a banker who is chairman of the Soviet Foreign Economic Consortium, as the new entity is called: ''We somehow created a state within a state. It gives us a lot of freedom.'' The American consortium wangled a few unique concessions that have not been disclosed previously, such as a five-year carryover of any losses against Soviet taxes. Why be hush-hush in this age of glasnost? Says Drovosekov, sounding like a capitalist guarding trade secrets: ''If this is published, it belongs to anybody who knows about it.'' Having invested months in negotiations, the consortium members hope to retain a competitive edge. The proprietary agreement, says Carbonell, ''provides a framework for us to invest in the Soviet Union.'' THAT STRUCTURE seemed too flimsy for Ford Motor Co., which seriously considered sinking several billion dollars in a Soviet auto plant. Ford dropped out just before the consortium signed its general trade agreement in March and has never before fully explained why. John Grant, Ford's executive director of corporate strategy, says it withdrew because Soviet assurances that companies could convert rubles to hard currency were ''not nearly strong enough.'' Ford still hopes to get a foothold in the Soviet Union, which Grant says has ''extremely ambitious'' plans. First the Soviets want to import Ford cars from West Germany -- some 100,000 annually for three years -- ''so that some results of perestroika would be seen on the streets of Moscow.'' Ford has no * trouble with that part, since the Soviets would pay in hard currency. As a second step the U.S.S.R. wants to modernize an auto factory in Gorky to assemble those cars solely for the Soviet market and later make all their components. Soviet and Ford officials, Grant says, never could agree on ''how far that integration could go.'' Other cracks could appear in the investment consortium. Its hard currency cannot start flowing until Chevron finds oil in the U.S.S.R. Explains Chevron vice president Scott: ''What we're looking for and what the consortium needs is a field already discovered that we could bring onstream in a short time, perhaps five or six years.'' The northeastern Caspian Sea has that potential, according to Soviet data, but Chevron has not explored the area. The company has to thrash out the terms of its contract before development can start. ''We're not taking a loss leader,'' Scott insists. ''Maybe the return has to be better than in other places because of the perceived political risks and Soviet inexperience.'' Chevron has made no commitment to serve as a cash machine for the other consortium members. Explains Scott: ''What we're guaranteeing is our share of the hard currency.'' In essence other members of the consortium will have to turn to Chevron's Soviet partner, which has agreed to sell its excess hard currency to them at a reasonable exchange rate. EXPANSIVE AS EVER, Giffen says that consortium members will sign most of the detailed joint venture agreements by year's end. But nothing in the Soviet Union goes quickly. Each company still has to haggle over terms and then fit them into an aggregate business plan that balances foreign exchange flows for the consortium. RJR Nabisco is well along in negotiating proposals to produce Camel and Winston cigarettes in Leningrad, as well as crackers and cereal in Moscow. Plants could be operating within a couple of years, according to Carbonell. The U.S. company also wants to make tomato products in the Soviet Union, which Carbonell says now loses 40% of its crop ''because of inefficiencies in processing and transportation.'' Kodak's initial challenge in the U.S.S.R. has been ''to bridge the gap between the two economic cultures,'' says David Harari, vice president and manager of the company's Eastern European division. The cost of labor and the need for profits, adds Kodak group vice president Frank Strong, ''haven't been part of their thought processes in a planned economy.'' Now that Kodak has reeducated its potential Soviet partners, its plans to make blood analyzers in Leningrad and computer floppy disks in Kiev may be signed into contracts by fall. To maintain the quality of those products, Kodak insists on importing all the components initially and controlling the pace of substituting local content. Kodak also hopes to open retail outlets for its imported film and photofinishing services in five cities in the western part of the country. Archer Daniels Midland, one of the largest U.S. processors of farm commodities, is also giving the Soviets a dose of reality therapy. They have been pushing for a soybean-processing joint venture, even though the economics are dismal because European producers and Brazil heavily subsidize soybean oil. Instead, ADM wants to set up a joint venture with a farm cooperative to process Soviet wheat into such things as fructose for sweeteners and gluten for bread. Most of the proposed $100 million investment would come from a Soviet bank loan, while ADM and Tate & Lyle, a proposed British partner, would provide just $20 million in equity. As to what Johnson & Johnson may turn out in the U.S.S.R., executives' lips are sealed with Band-Aids. But Chairman Drovosekov of the Soviet consortium says intriguingly, ''They have very good salesmen traveling all over the Soviet Union tempting factories to enter joint ventures.'' Six other U.S. companies, including Pfizer and Colgate-Palmolive, have formed a medical consortium. Without paying fees to a middleman, the members will get the same foreign exchange arrangements as the supposedly exclusive American Trade Consortium. Says Dennis Sokol, chairman of Medserv International of Stamford, Connecticut, and organizer of the group: ''This could very well be a model for industrial cooperation with the Soviets.'' Medserv is already committed to three joint ventures: factories that make dental fillings and dental drilling burrs, plus a maternity clinic that may also involve Hospital Corp. of America. Abbott Laboratories is interested in producing baby formula, while Hewlett-Packard, another member, is exploring a venture for medical instruments. The only joint ventures up and running are those in which the U.S. partner deals singly with the Soviets. Combustion Engineering has put its venture on the road to profitability, though Chairman Charles Hugel admits that ''there are many potholes along the way.'' The U.S. company has invested $8 million in / a small plant that assembles its process-control instruments. Among the endemic problems, says Hugel, is ''the relative lack of understanding of Western management techniques, such as how to delegate authority.'' Manufacturing consistently to precise standards is ''not easy,'' he adds. And obtaining acceptable parts is tough in a land with no real national distribution system or even business directories. EVEN SO, Combustion's pioneering enterprise expects to earn some $1 million on $30 million in sales this year, its second year of operation. Some of its problems come from Washington's delays in approving export licenses. Vatzlav V. Krotov, the Soviet general director of the joint venture, stresses that this can hurt the bottom line: ''We lost a year that could have been used to make profits.'' Combustion's joint venture has opened other doors. The company will be in charge of developing two huge petrochemical complexes in western Siberia costing over $4 billion. The Soviet partner is the ministry of the oil refining and petrochemical industries, which according to Hugel ''processes more than twice as much oil as Exxon and Shell combined.'' Combustion has enlisted McDermott International, plus Mitsubishi and Mitsui of Japan, for the Siberian work, and the Soviets are lining up the cash. With several other big Soviet projects under negotiation, Hugel is understandably bullish about the market. But he proffers this advice on doing business in the U.S.S.R.: ''You have to be flexible and do barter deals, which is easy when you're working in energy. You also have to get the Soviets to borrow money.'' And he has no illusions about the difficulties: ''Believe me, it's not glamorous. I've gotten down on my hands and knees to clean the bathroom of my hotel room in Moscow.'' Barter trade has made Pepsi-Cola the best-known American brand name in the U.S.S.R. The soft drink concentrate for 24 Soviet-owned bottling plants is financed by sales of Stolichnaya vodka in the U.S. PepsiCo, which started the arrangement in 1972, must keep finding new sources of foreign exchange to expand its sales in the U.S.S.R. Introducing a new premium vodka in the U.S., for instance, made possible the introduction of Fiesta, a lemon soda created especially for the U.S.S.R. Other companies, driven by visions of a perestroika boom, are trying just about everything to gain a toehold in the U.S.S.R. Last month 3M held a seminar in Moscow on managing a diversified corporation. Monsanto has signed & up to do joint biomedical research with the Soviet state committee on science and technology. And Arthur Andersen & Co. made a deal with the U.S.S.R. Chamber of Commerce and Industry to help locate Western joint-venture partners. But for every U.S. company on the prowl in the land of the bear, hundreds are hanging back. Explains Vladislav L. Malkevich, chairman of the U.S.S.R. Chamber of Commerce: ''Some businessmen take a skeptical attitude about our reforms. They cannot understand all the bureaucratic obstacles.'' Their caution is understandable, especially following recent setbacks in China. Yet who can ignore a market that has nowhere to go but up?