FROM RUSSIA WITH DEALS : The current ‘Entertainment Summit’ symbolizes warming Soviet-American cultural relations. But in Moscow, Gorbachev has been trying for months to create a Hollywood on the Volga.

Though it’s sometimes hard to tell who’s romancing whom--and difficult to separate a carefully orchestrated public relations gambit from reality--Soviet and American film makers are engaged in a heavy flirtation.

The courtship between film-making contingents of the two superpowers began heating up well before “The Entertainment Summit” in Hollywood ever began. (The summit--in which 10 representatives of the Soviet film industry, headed by director Elem Klimov, are meeting their American counterparts--ends Wednesday.) Though the summit is symbolically important, the real action lately has been in Moscow, where the Gorbachev regime would like to establish a Hollywood on the Volga.

American executives and actors who’ve trekked to Russia to talk showbiz with Soviet bureaucrats claim that more progress has been made between the two sides in the last four months than in the last two decades.

Among projects with some degree of Soviet-American cooperation that are under discussion:

An MGM remake of “Anna Karenina,” to pair American actress Meryl Streep with revered Soviet director Nikita Mikhalkov, and to begin filming, with Lawrence Schiller producing, in the Soviet Union in December.

“Allies,” a CBS-TV movie, in which a Russian pilot and an American pilot, each shot down during World War II, become friends while fighting side-by-side in the Italian underground. Allegedly based on a true story, the movie will be developed from interviews conducted by Soviet spokesman Vladimir Posner and adapted for the screen by Schiller.

“The Life of Margaret Bourke-White,” a CBS miniseries based on the late Life magazine photographer. Bourke-White traveled extensively in the Soviet Union during the 1930s as the first foreign correspondent hired by Soviet authorities to photograph the industrialization of Russia.

“Hamlet,” for which Kevin Kline was in Moscow last weekend to meet Gleb Panfilov, a Soviet director who plans to adapt Shakespeare’s classic in a contemporary manner and hire an American star. Kline said that he is “exploring the possibilities” of working with the Soviets.

“Siege of Leningrad,” a Soviet-inspired project that the Russians have discussed with producer Schiller and Italian director Sergio Leone.

And, although the Soviets would not even admit to their nuclear disaster at Chernobyl when it first happened last year, they are now considering a CBS proposal to make a movie about the affair.

Each side has its own ulterior motives for the thaw in relations, of course. The U.S.S.R., desperate for hard currency, wants to lure expensive American productions to the Soviet Bloc countries--and to find more outlets here for its films. And American movie makers, ever hungry for foreign markets, covet the largely untapped audience in the Soviet Union.

“It isn’t an intimate business anymore,” said New Yorker Gerry Rappoport, who for nearly 30 years has virtually monopolized Soviet-American film distribution, partly because dealing with the Soviets can be so difficult that no one else was very interested in trying. “Now, everybody is romancing the Eastern Europeans. And the Soviets are going for the big dollars.” At the moment, the cash-poor Soviets have much more to gain from an increase in business with the Americans than the Americans do. And they have been bending over backwards to make accommodations. They are taking cordial transcontinental meetings with big-name movie stars and directors. Russian actors and directors are spending their free time boning up on English. And the Soviets have begun making movies in English, rather than Russian, even when Americans are not involved.

The reason is simple: English-language films are the most profitable in the world.

Meanwhile, many Americans are doing their part to cooperate: Schiller, whose “Peter the Great” miniseries for NBC was filmed in the Soviet Union in 1984, speaks no Russian. Schiller’s entourage these days includes three interpreters--one educated in culture, film and drama; one who specializes in negotiations and legal areas, and one who is a historian on the Soviet Union.

“The Russians appreciate anyone who does their homework,” Schiller said.

To be fair, there is more than just business at the heart of the Soviet-American mating game: Many American film makers cherish Soviet film makers as survivors of a system that has managed to produce occasionally brilliant films despite decades of repression and isolation from the rest of the world. And some see in cultural exchange a hope for ongoing communication and understanding regardless of the vagaries of international politics.

The ripening relationship is due in large part to a shake-up of the Soviet film hierarchy under the new regime of Soviet leader Mikhail S. Gorbachev. “Artists have replaced bureaucrats” in key slots in the Soviet film bureaucracy, as director Norman Jewison (“The Russians Are Coming! The Russians Are Coming!”) puts it.

The visiting Soviets, creative types all, are proof that the Soviet Union has freed at least some of its film makers to do business with the West. They also represent the first generation of Soviets ordered to operate the vast Soviet film making system for a profit--another recent Gorbachev innovation.

But it’s a prospect fraught with peril. For starters, Russian movies have never been commercially viable here. And many publicly owned entertainment companies still have fears about getting involved in ventures with the Soviets. As one prominent American producer asked: “What would happen if a half-finished production went down the drain behind the Iron Curtain because of some international crisis or a swing in the Soviet mood? What would (HBO chairman) Michael Fuchs tell the (Time Inc.) shareholders?”

Nonetheless, companies ranging from Columbia Pictures, HBO and Orion to Vestron International and Viacom are talking business with the Soviets. And individuals like Columbia Pictures President David Puttnam, director Sydney Pollack (“Tootsie”), influential businessman Armand Hammer and Jewison are involved with the Soviets at the current summit.

Lately, Muscovites reportedly have seen the likes of Robert De Niro on exploratory trips regarding film roles. Kevin Kline just returned from a journey to Moscow for the same reason, and actress Meg Tilly plans to depart shortly.

American celebrities who attended an international peace forum in Moscow in February came away with the feeling, in actor Gregory Peck’s words, “that the openness (of the Gorbachev regime) is real and the Soviets mean business.”

According to one high-ranking Soviet Politboro member who mingled with Americans at the forum, “Peter the Great” was “an important first step” toward doing more show business with the Americans. Not just because the Soviets were paid $5 million for their services to the production, but also because it was the first time the Soviets allowed outsiders to film a story about Russians in the Soviet Union without restrictions.

“The Soviets had no control over what the miniseries would say or how it would say it,” insisted Schiller, who is now involved in eight projects with some degree of Soviet-American cooperation.

To profit-oriented capitalists, the Soviet Union represents a potentially enormous audience: more than 100 million hard-core moviegoers. (The Soviet per-capita movie attendance is 15.7 times a year, according to Soviet figures, compared to 4.7 times a year for Americans.) According to Sovexport, the Soviet agency that oversees sales and relations with foreign companies, popular movies in Russia routinely draw 50 million to 60 million people.

But Soviet-American movie relationships have traditionally been strewn with so many obstacles that the only permanent link in nearly 30 years has been Rappoport. A former New York talent agent, Rappoport fell into a job booking a polka band into Eastern Europe in 1960, which led to trading films with the Soviets. He’s been doing it ever since. Today, the rounded, dapper 61-year-old with the glistening white handlebar mustache serves as a Santa Claus of movies, regularly delivering goodies to a Soviet populace crazy for American films.

His company, International Film Exchange (IFEX), operates out of an obscure and slightly shopworn suite of offices off Seventh Avenue in New York, but it annually sells more American movies to the Soviets and Eastern Bloc countries than all of the major studios combined.

A proposal now before the Soviet film ministry would call for Sovexport to open its first American office in partnership with Rappoport under the roof of Beverly Hills-based Heritage Entertainment. (IFEX merged with Heritage last year.) If the plan is approved, Rappoport would help manage Soviet projects in the United States, along with a Soviet film “consultant” who will relocate to Heritage.

Rappoport has so much business going with the Soviets, he didn’t have time to attend the current summit. Beginning Monday, he is scheduled to host his annual IFEX London Festival in England, a private and popular affair that attracts delegates of film officials from the Soviet Union and every Eastern Bloc country. He provides first-class accommodations in an exclusive London hotel, a private screening room for each delegation and a vast selection of English-language movies for sale--174 this year, including “Hoosiers,” “Platoon,” “Blue Velvet” and “Something Wild.”

By the time the festival ends on Friday, much of what the Soviet Bloc will see in the way of new American movies this year will have been determined.

Partly by providing services that Hollywood’s major studios have been unable or unwilling to provide, and partly by his patient, low-key manner, Rappoport has earned the Soviets’ trust while building his 10-person company into an enterprise that had revenues of more than $6 million last year.

How one approaches and deals with the Soviets is clearly crucial to success.

In an interview at the Soviet Ministry in New York, Valentin Manturov, the first secretary of the U.S.S.R. Permanent Mission to the United Nations, said: “Gerry has the correct approach. He does not derive a profit from the London festival. And he’s not (in business) just for the sake of money but because the films (that Rappoport handles) have the good contents.”

How badly do Soviet citizens want American movies?

“Every time an American film is run in the Soviet Union, it doesn’t matter if it’s the lousiest film ever made, you can’t control the crowds,” said Gary Essert, who has traveled to Moscow as head of Filmex and who now acquires Eastern European films for the American Cinematheque, an international film emporium in the planning stages.

“They put them in 5,000-seat theaters because they know the people will come,” he said. “They know if it’s an American movie, it really is going to be made from an entertainment point of view, first and foremost, and they’re starving for that.”

The average ticket price in Russia is 40 kopecks, or about 50 cents. At that rate, a hit movie can bring in as much as $35 million. In the United States, the film distributor would receive about 50% of that $35 million. The problem with the Soviet box office is that it doesn’t deal in dollars but in rubles, which are almost impossible to use outside the Soviet Union.

The Soviet Bloc has never agreed to give American producers the percentage of the take they’re accustomed to, insisting instead on flat fees for a given period. Lacking dollars, the Soviets have been able to pay laughably low prices for American movies--an average of $50,000 for films that have the potential to generate millions of rubles at the box office.

Other Soviet Bloc countries pay even less.

The Soviets’ insistence on equal trade has also been a sore spot in relations with Hollywood’s major studios, which are almost never interested in acquiring Soviet movies.

According to Essert, who has witnessed many negotiating sessions between Hollywood distributors and the Soviets, they invariably go the same way--with the Soviets trying for even exchange: “Sometimes they even get down to, ‘OK, we have one, you have one, let’s exchange.’ But then, if the Americans have a Robert Redford blockbuster and the Soviets have a small art film, the Soviets will want even money exchanged.”

So far, however, problems that have strained relations in the past--including rampant Soviet bootlegging and censorship (see accompanying article)--have not stopped the gathering cultural momentum.

Producer Schiller has a recent snapshot that he calls “a picture of international cooperation,” which shows a small group of American, Russian, Italian and British film makers gathered together in front of a church in the 9th-Century Russian town of Suzdal. In some ways, the snapshot epitomizes the new partnership at this moment.

Whether that partnership is destined to be just a happy memory--or the start of something big--remains to be seen.