Economy rebounds, but Russia still struggles on world stage

Like more and more companies in Russia these days, Saint Springs Water is flying high. Thirsty consumers are buying its distinctive clear bottles, shaped like a Russian Orthodox church dome, twice as fast as last year.

Yet the Moscow bottled water maker itself is a tough sell -- attracting tepid demand from potential corporate buyers able to pay top dollar for the company, its U.S. owners say.

Saint Springs Water is hardly alone.

Since Russia's ruble meltdown in August 1998, the economy has staged an unexpected comeback, buoyed by soaring oil prices, favorable currency rates, rising incomes and pent-up domestic demand for consumer goods.

To the surprise of many outside observers, Russian businesses are flourishing and foreign companies from Gillette razors to the Ikea retailer are expanding.

Russia attracted more than twice as much foreign capital in the first five months of 2000 -- $10 billion -- as during all of last year, the Russian government says. That's on top of a 27 percent jump in foreign investment and loans in 1999.

Yet many foreign companies and investors are holding back, still smarting from the 1998 fiscal emergency. They're waiting to see if the Russian recovery sticks and if President Vladimir Putin institutes much-needed reforms of the nation's Soviet-era regulatory systems.

Such concerns form an uncertain backdrop to President Clinton's first summit with Putin this weekend.

''The perception is still that Russia is a difficult place, one that could have many bumps in the road before you would turn a profit, and one whose tax and legal systems are opaque,'' said Douglas Lamont, a professor of international marketing at DePaul University.

The lesson is tough to forget. Following the ruble plunge, foreign corporations and investors lost billions, Russia missed debt payments, and accusations flew of government money laundering and corruption.

Owing little thanks to its government, Russia's economy is reviving.

Analysts say the recent spurt in global oil prices can't last.