LET'S DO BUSINESS The Soviet Union is open for deals as never before. As a top executive warns, ''If U.S. companies wait until all the problems are solved, somebody else will get the business.''
By Paul Hofheinz CONTRIBUTING TO THIS STORY WERE Ann Reilly Dowd, Christopher P. Knowlton, Louis R. Richman, James Beeler, Suneel Ratan, Emily Thornton, Thomas Martin, Alicia Hills Moore, and Karen Nickel.

(FORTUNE Magazine) – BORIS YELTSIN never actually said the words across the top of this page, at least not within earshot of this writer. But he might as well have. Everything the Russian President and his new partner, Mikhail Gorbachev, declared and did in the past few tumultuous weeks, and will do in the next few, adds up to that simple message. The Soviet Union, or whatever we ultimately call the collection of diverse, bumptious entities on Europe's eastern flank, is wide open to Westerners with checkbooks. Says a senior Western diplomat in Moscow: ''Opportunities like this come up maybe once a century.'' Sure, all the horrendous problems remain. The country is still lurching through a hair-curling depression. Gross national product has fallen by 10% in the first half of this year. The budget deficit has ballooned to $33.5 billion. To pay bills, the government is rolling the presses, which has led to an inflation rate of 250% and rising. Moscow by some estimates is more than $60 billion behind in hard currency payments to foreign creditors. Finally, rising cries for independence from all the familiar ethnic groups, and a few nobody ever heard of, are enough to rattle even the most seasoned geopolitician -- or the most intrepid investor. Yet you need only focus on what was happening under cover of the coup to see why Western businessmen should be at least a little euphoric. On the second of the junta's three days in power, while the world was watching Yeltsin's heroic stand, the KGB began 157 criminal investigations into what it called economic crimes. These included ''concealment of superprofits'' and ''links with ; criminal groups.'' At least two-thirds of the cases, reported the KGB, involved foreign firms in joint ventures. Says Pavel Nefidov, a director of Butek, a group of privatized Soviet factories formed last year: ''We really thought that this was the end of all business activity in Russia.'' The quick collapse of the coup demonstrated the strength and staying power of the economic reforms that have been put in place in just the past 18 months or so. Surely the glasnost-given taste of freedom and democracy was on the tongues of the tens of thousands who defied the tanks in the center of Moscow. But perestroika -- economic reform -- also helped drive them into the streets. Some 16% of the Soviet Union's 135 million workers already have jobs in cooperative or other private sector businesses, according to government statistics. Many were at the barricades. One of the three people killed was Vladimir Usov, 37, contract negotiator for Icom, a joint venture between a private Soviet firm and a consortium of state agencies that explores for oil in Third World countries. Young Soviet citizens who work for Pizza Hut ran through the roiling streets to deliver 300 pizzas and 20 cases of Pepsi donated by PepsiCo to the demonstrators. They even managed to get 60 pizzas into the Parliament building where Yeltsin and his staffers were holed up. The President later sent a note of thanks. The whole episode -- really Russian Revolution II -- marked a coming of age for a new generation of Soviets. Indeed, it was partly the growing strength of that generation that led the junta to take its ill-fated action in the first place. Since Stalin's time, Soviet bureaucrats had effectively owned the country. In the absence of real property rights, the Communist Party bureaucracy controlled the economy by giving orders. Six years of reform were finally threatening that. Says Anatoli Avdeyenko, the director of Etalon, an electronic-components factory that was one of the first to be privatized under perestroika: ''They couldn't do anything except issue decrees and interfere. The bureaucrats were scared that no one would need them at all.'' Western investors were drawn to the Soviet Union in the first place by its huge potential market and Gorbachev's promises of reform. At the same time they were continually frustrated by both the slow pace and the frequent backtracking as Gorbachev tried to assuage the hard-line Communists. Now the party is gone, along with the meddlesome apparatus that extended like an octopus into every corner of the empire. Gone too is the KGB as a reactionary force. Its new master, Vadim Bakatin, is a credible democrat who has pledged to turn the once feared agency into a law-abiding overseas intelligence service. INTO THE VACUUM has stepped the new generation of Russian -- yes, most definitely Russian -- leaders. Dedicated to implementing the reforms that Gorbachev only talked about, these men are educated in Western ways. They actually want foreign business to come in. Says Yeltsin: ''The best thing we can do now is give people their freedom and not interfere.'' Yeltsin cannot, however, be hands off with the economy. At his urging, Gorbachev has appointed a four-man committee to revamp economic policy. A leading member is Grigori Yavlinsky, 39, a brilliant, unkempt free-market economist who spent a month at Harvard earlier this year devising a detailed plan to convert the Soviet Union to a market economy. It calls for adherence to a strict schedule and resembles in some ways the so-called shock therapy Poland put into effect last year on the advice of Harvard economist Jeffrey Sachs, though the shock will be spread over a longer time. Gorbachev was cautious about the plan when Yavlinsky first presented it last spring, while Yeltsin backed it. His biggest task will be to restore some value to the discredited Soviet currency. Says Robert Hormats, former U.S. assistant secretary of state and now vice chairman of Goldman Sachs International: ''The reformers must use the next month or two to lay out the fundamental pieces of a price and currency reform program.'' So far, Yavlinsky has kept quiet about what he will do. Western diplomats expect that he will move quickly to slash government spending, legalize private property, and abandon price controls. The goal would be to restore value to the wounded ruble so that it can be made convertible with the dollar and other hard currencies. Says one diplomat: ''There are no more ideological hang-ups. Now they can at least get the laws in place and start working on the hard part -- implementation.'' Under the Harvard plan, all of these Soviet steps would be accompanied by heavy U.S. and European aid. The Soviet Union would eventually be granted membership in such world bodies as the International Monetary Fund and the World Bank. Says Dwayne Andreas, CEO of Archer-Daniels-Midland, and a longtime friend of Gorbachev's: ''American policy will have to react nimbly to the quickening pace of reform.'' He thinks there is ''no longer any excuse'' to delay granting the special trade privileges for the Soviet Union that President Bush was about to seek from Congress just before the coup.

American businessmen also hope that as reform goes forward, the Soviet Union will establish a clear and streamlined framework of commercial law appropriate to a market economy. Says David Williams, the PepsiCo senior vice president who oversees the Pizza Hut business in the U.S.S.R.: ''If I spent all my time reading every law on enterprises they've passed over the last two years, I'd have no time to do anything else, and in the end I wouldn't be any wiser.'' The process of democratization has also contributed to the process of disintegration of the U.S.S.R. Led by Yeltsin and the Russian Federation, many of the 15 Soviet republics have been battling Gobachev for more than a year, insisting on sovereignty. The new Union Treaty they were set to sign when the junta tried to upset their plans would have settled the issue. Now they want more than a new treaty. As FORTUNE went to press, ten of the 15 republics had declared their independence -- and several more were preparing declarations. SHOULD BUSINESS be worried? The collapse of one of the two superpowers pushes the world into unknown territory, which is nerve-racking. But for Western managers, the breakup could eventually be a big plus. Says Donald Kendall, former CEO of PepsiCo: ''Decentralization means chaos in the short term. But in the long term, it's better.'' Then he adds, ''If U.S. companies wait until all the problems are solved, somebody else will get the business.'' Also, most of the republics cannot exist on their own. Many are poor (see map), and most of them don't have oil. Technocrats in the republics are cooperating more than their political leaders would like to admit in public. Yavlinsky and his colleagues have already persuaded all 15 republics -- including the maverick Baltic states -- to help draw up a comprehensive economic reform. The Baltics in particular are dependent on Soviet oil to run their industries. This cooperation is something Gorbachev couldn't achieve when the Baltic states were still fighting him for their freedom. Says Georgi Matukhin, head of the Russian Central Bank: ''We will be trading with one another regardless. We need each other -- whether we like it or not -- but we may have to come apart in order to come back together again.'' The breakdown of the union also means more opportunities for Western companies. Republics like Moldavia and Georgia desperately need an enormous amount of infrastructure investment -- from road construction to a phone system that works. To get it, they are ready to offer generous terms for mineral rights and other kinds of business deals. Georgia has invited foreign companies to bid for mineral water concessions. Kazakhstan and Azerbaijan are negotiating with foreign firms, including Chevron and Amoco, for oil exploration rights. The Baltic states are talking about setting up special trade regulations on their territory in order to attract foreign investment. In addition to favorable terms, though, the West will also want a solid financial structure. Says Goldman Sachs's Hormats: ''The major republics will need their own foreign-trade bank capitalized with the hard currency they earn through the deals they strike. If the newly independent republics turn hostile to each other, however, the whole process could break down. James A. McClung, international vice president of FMC, agrees. His company has long sold farm and industrial machinery to the Soviets. Says he: ''They must quickly establish an effective credit and banking infrastructure at the republic level.'' One benefit of the independence movement is an end to the crippling 15- month- old ''war of laws'' -- in which republics would pass one set of laws only to see Moscow enact a contradicting set. Such counterpunching created migraines for businessmen trying to figure out which laws to abide by. The collapse of the central government has irreversibly tipped the political balance toward the republics, which were always more free-market minded. Says Michael Claudon, president of the Geonomics Institute, a research organization in Middlebury, Vermont, specializing in U.S.-Soviet commerce: ''Very soon, even by the end of year, an American company will be able to go in and negotiate a deal with Russia or Kazakhstan and come away feeling that it has a viable contract.'' SOME U.S. COMPANIES have begun bypassing Moscow to deal directly with the republics. Coca-Cola says it will switch distribution rights for the Baltic states from Moscow to its Nordic division in Oslo. AT&T recently sold a sophisticated digital-switching system to the Armenian government -- the first time the company has sold equipment directly to a Soviet republic. The biggest winner could be Chevron. The U.S. oil giant has been negotiating on and off for four years for rights to drill the huge Tenghiz field in Kazakhstan (conservatively estimated to hold 25 billion barrels, about the same as Alaska's North Slope). Before the coup, bureaucrats in Moscow led an aggressive flanking action designed to derail the deal. They took pot shots at Chevron in the press, accusing the company of offering demeaning terms (a charge Chevron denies) and lobbying Gorbachev himself to squash the talks. Now, with the central authorities in disarray, Chevron hopes to conclude the deal quickly with Kazakh officials. Amoco has had the opposite experience. It has a deal, but one of its partners is the oil ministry in Moscow. In June, Amoco won a first-ever bidding competition to enter a joint venture to develop offshore oil fields in the Caspian Sea in Azerbaijan. Says Peter Kennel, the Amoco vice president who led the negotiations: ''It's too early to say how or whether we'll be affected by the coup attempt. It was quite clear in the months preceding it that the Soviets and the Azerbaijanis wanted this joint venture to succeed. No meetings or plans were disrupted, but we'll have to wait for the dust to settle to see if there will be any delay.'' Then he adds: ''One of the principal concerns of any business engaged with the Soviets is to clarify who is responsible for what.'' Even if the republics do not ultimately cooperate with one another, the Russian market alone offers enough to make even a laid-back CEO's mouth water. With some 150 million people, it would be the fifth-largest country in the world. It has more proven gas reserves than Saudi Arabia and vast quanities of timber and gold. Russia has first-rate scientists and trained managers -- all eager for foreign money and management skill. Access to this market will depend on Yavlinsky's ability to repair the damage wrought by 74 years of bombed-out Communist economics. This is a daunting task, but he'll have the help of a rising entrepreneurial class. Tokobank, a Moscow-based commercial bank with affiliates in 11 cities, has built up $1.4 billion in assets since opening in October 1989. Vyacheslav Khokhlov, the deputy director, says the bank is changing its cautious loan policy to take advantage of new opportunities. Says he: ''Now is the time for a more aggressive policy.'' Says Avdeyenko of Etalon, the electronics company: ''You can make money here. And we can tell you how to make it. We know the market better than you do.'' . AS THE EUPHORIA wears off, proud Russians are turning to the formidable problems facing their young democracy. ''We need, simply, to calm down and get back to work,'' Yeltsin patiently told the nation in a televised post-coup interview. He's right, of course. And if the notion of 285 million people with enough pent-up demand to clean out dozens of Wal-Marts in an afternoon excites you, if you're a manufacturing company with a global strategy or you're eager for a place in one of the world's great, untapped frontiers, if the notion of billions of barrels of proven oil reserves and billions of tons of gold fills your dreams with visions of red-hot cash flow and ice-cold vodka, then Boris Yeltsin just might find some work for you.