Doing Business : Food Is Still Art at Ukrainian Cafe : * But the owners of a Kiev restaurant have had to resort to a primitive barter system to keep things that way.

The economy of the former Soviet Union may be a shambles, but at Artcafe, tables groan with roasted meats and Armenian brandy flows like the Dnieper River.

Located on a quaint street just a stone’s throw from the gold-domed, 11th-Century St. Andrew’s Cathedral, this private restaurant in the Ukrainian capital, with its savory food, candle-lit nooks and live classical jazz, seems a small island of sanity in the disintegrating Soviet empire.

But even here, trouble looms behind the opulent veneer. The breakdown of trade between the republics has led to hoarding and food shortages. As things get worse, Artcafe’s Armenian owners turn to an increasingly primitive system of barter and bribes to stay afloat.

This cafe’s struggle is being repeated all over the former superpower as people resort to drastic steps to survive amid economic chaos.

At Artcafe, perhaps the most ominous sign of trouble is the shotgun that leans discreetly against the wall in the back-room office of restaurant manager Amaiak Verdian.

“We’re in a very unstable period and there is only the law of the jungle,” explains Verdian, 43.

Since they can’t count on empty state food shops, restaurants must make private arrangements to procure everything from apples to zucchini. Proprietors like Verdian turn to the food bazaars where meat, fruits and vegetables are found aplenty--albeit at prices that are astronomical to the Ukrainian pocketbook.

(Dried apricots sold by nut-brown Uzbeks from central Asia, for instance, fetched 56 rubles per kilo at the Belarussian Rinok, or market in downtown Kiev, even before food prices went up threefold last week. That was almost one-quarter of the average Ukrainian monthly salary.)

Not surprisingly, Verdian says 80% of his patrons are from the West. Few others can afford the approximately $10 per person cost for a generous meal.

In addition to liquor, Artcafe boasts goodies like smoked salmon, black caviar (the real stuff, not lumpfish roe), shish-kebab, a variety of sliced sausages, vegetables, fruit and salads made with beets, carrots and raisins. The place is even listed in Bantam’s 1991 guide to the Soviet Union.

Luckily for his clientele, Verdian can also turn to the Armenian Connection when supplies run short in the Ukraine. Working with his extended family in Yerevan, the restaurateur has made a complicated series of deals to take advantage of the disparity of goods from republic to republic.

He ships his family meat and produce from the Ukraine, for example. They ship him wine, brandy, olives and spices from the Caucasus. Occasionally, if Verdian gets hold of a shipment of clothes, shoes, or anything else that might fetch a higher price in Armenia than Ukraine, he throws those in as well.

Of course, they must get around fuel shortages. Planes often are delayed by days because there is no jet fuel to fly. Recently, up to half the domestic airports in the former Soviet Union have been shut down for that reason. Around Christmastime, the Tass news agency reported that a crowd of hungry and exhausted passengers stormed an Aeroflot plane and ordered its crew to take off after a 24-hour delay.

But Verdian’s shipments always fly on schedule, he says, with an Artcafe employee riding guard with the cargo to make sure none of it “disappears.”

“We’ve arranged with the airport administration that if they find fuel for the planes, we give the airport workers one shipment of eggs and meat,” Verdian explains.

Then there is the problem of paying off the local mafia, whose minions come around like clockwork to extort money from businesses that began flourishing under perestroika.

“First the bandits came and they asked for 70 rubles a day,” Verdian says. “But I knew perfectly well they’d want 1,000 rubles the next day so we took a strong stand.”

He declines to elaborate, saying only, “It’s our business how we do it.” But he maintains staunchly that his restaurant is the only one in Kiev that doesn’t pay extortion money.

“So far, we have been able to fight them off. All the other cafes in Kiev have to pay off the racketeers,” Verdian says.

Can’t he complain to the police?

“Hah!” Verdian whoops, breaking into his first smile, “they’re the biggest bandits of them all.”

Private restaurateurs like Verdian are used to jousting with Soviet bureaucracy and mafiosos. But another problem emerged last year when the Ukraine began moving toward independence--which was overwhelmingly approved by the republic Dec. 1.

Worried about feeding its people this winter and concerned that up to 80% of its foodstuffs leave an area once known as “the breadbasket of the Soviet Union,” the Ukrainian Parliament passed a law that prohibits the export of food to other republics.

This has thrown a wrench into Verdian’s well-oiled barter machine. He says the restaurant now faces “major problems” in trading with the Armenian branch of the family. No one wants the worthless and devalued rubles these days, and Artcafe doesn’t have access to hard currency.

Verdian declines to say whether Artcafe is now bribing customs officials to continue shipping foodstuffs or has found some alternative route.

“We are trying to use some other methods, but it’s very expensive,” he mumbles mysteriously.

Verdian’s sole experience in the food service industry before Artcafe was running an ice-cream kiosk in Yerevan. His big break came four years ago when his nephew Rafael Sidrakian decided he could make more money as a businessman than an aviation engineer.

Still, it took him 1 1/2 years to complete the necessary paperwork, get the permits, find a location, buy equipment and open the restaurant, Verdian says.

The young entrepreneur soon invited Verdian from his earthquake-ravaged homeland to manage the restaurant and its 34 employees. Recently, Verdian brought over his own son.

Artcafe pays its employees roughly double the average Soviet wage to keep them loyal and to discourage pilfering, and they can eat meals free, Verdian says.

Family members work up to 18 hours a day, but the labor pays off; Verdian says the restaurant makes a 40% profit. He sits in his office, surrounded by the accoutrements of success: a portable phone, VCR, big television.

For him, this is proof that capitalism works. “Our family has three cars, we invest all our profits in new business and we plan to open a second restaurant soon,” he says proudly.

Meanwhile, he waits to see what changes Ukrainian independence and the commonwealth that replaced the Soviet Union will bring. He hopes the new laws and government will bring economic and political stability so that his restaurant thrives.

“It has always been difficult to have a private business,” Verdian sighs, “but now we have to fight through mountains of problems just to survive.”