Strauss Offers Store of Ideas for Russia : Economy: The U.S. envoy suggests opening a dozen groceries to help the transition to a free market. And he has thoughts on railways and oil fields.

Amid Russia’s collapsing economy, U.S. Ambassador Robert S. Strauss has an idea on how to help reverse the trend and move away from seven decades of Soviet socialism--open a dozen grocery stores.

“Not big American supermarkets with everything, but stores that sell milk and eggs and sausage and vegetables,” Strauss said Wednesday. “You know, grocery stores.

“People need food, they have money and they will buy. Get two, three, four entrepreneurs and help them open corner groceries. They will find suppliers willing to sell at prices people will pay. It’s a market, it will work and it’s what Russia needs.”

Strauss’ credentials as a big-time capitalist are not to be doubted--his fees as a deal-making Washington lawyer often ran into millions--and his political smarts as the former chairman of the Democratic Party are also clear.

Although an odd thing for the U.S. ambassador to be taking up, the grocery store proposal typifies the “let’s-do-it” approach that Strauss, 73, has brought to his job.

“This is what I hired out to do--make something happen,” Strauss, a longtime friend of both President Bush and Secretary of State James A. Baker III, told reporters. “We have tried to move this embassy where it belongs in the 1990s. This has been a reporting embassy for a long time, but we are trying to make it an action embassy. We’re trying to do things.”

But grocery stores?

Well, Strauss’ father ran a dry goods store in Texas, and his appreciation of profit and loss began at the cash register there. In fact, his argument, while colorfully put, has economic merit. The continuing monopolies of the old Soviet state enterprises are a major barrier to the development of a free-market economy; the Russian government, so far, has been unable to break up these enterprises or to privatize them, and recent price increases have strengthened their hold on the economy rather than spurring competition.

“I think there are plenty of Russian entrepreneurs with a competitive spirit,” Strauss said, “and if they want a partner I will go into business with them myself.”

Politically, opening privately owned groceries, their shelves well stocked with food at competitive prices, would be important for Russian President Boris N. Yeltsin--a demonstration to Muscovites that things are changing, that better times are coming, he said.

Quite serious about the grocery project, Strauss has pressed the idea on top Russian officials who would have to authorize the stores. He has taken up their financing with the head of the country’s central bank. He now plans to ask Moscow’s mayor for the dozen storefronts that would be needed.

“You don’t have to do everything bigger than all outdoors--let’s get started,” Strauss said.

After six months in Moscow, Strauss has dozens of other projects where he thinks that American experience and know-how can help speed Russia’s economic and political transformation. Among those he has pending:

* Persuading Paul A. Volcker, the two-term former chairman of the Federal Reserve Board, to serve as a part-time adviser to the Russian government as it puts the country onto a sound fiscal footing. “I don’t think anything will give (Deputy Prime Minister Yegor) Gaidar and his government more credit internationally than getting Paul Volcker over here, reviewing the program and giving his stamp of approval,” Strauss said.

* Bringing seven teams of investment bankers--”real deal-makers”--to a dozen Russian cities next month to stimulate American investment. “I hope this trip will really turn the tide,” Strauss said. “There’s no reason why American business can’t compete in this vast market.”

* Borrowing a top American railroad expert from Union Pacific for a year to reorganize the massive railway system here. “This is not hard to do,” Strauss said. “In Poland, it took 15 months, but here it would take less.”

* Moving American oil companies into some major Siberian oil fields to boost production by shutting down marginal wells and concentrating on those where the flow can be improved. “It’s very, very easy to do,” Strauss said, “and it’s a quick hard-currency earner.”

* Getting U.S. specialists to advise on the handling, packaging and storage of agricultural produce to reduce losses that often total a quarter of the harvest.

“All in all, I could run down 15 things like this we could do to help, and there are many more,” Strauss said. “In trying to move from a centrally planned to a market economy, there’s a hell of an educational process to go through . . . (because) there’s just no experience at making anything function well.”

Strauss reiterated his strong belief that America and its allies have a huge stake in Yeltsin’s success in transforming Russia and that they should underwrite his reforms with billions of dollars in financial assistance. “He is right to be a little weary of 10 or 15 countries sending diplomats through here, talking to him but giving him more conversation than cash,” Strauss said of the Russian president. “He can’t live on conversation--he needs tangible support.”

But Strauss is more cautious than before, arguing that aid to Moscow should come primarily in loans, not outright assistance, and that Russia should pledge its natural resources exports to ensure repayment. He also urged Russia’s early admission to the International Monetary Fund, which will lend it money to finance its economic reforms but is likely to insist on strict adherence to fiscal controls.

“We can’t risk the taxpayers’ money unless there is a return for it, and in my judgment there is a very good return,” he said. “There is a risk you will lose money, but there is a greater risk if you don’t assist.”

Strauss said he believes that Russia has come through the first of Yeltsin’s planned economic “shocks”--last month’s massive price hikes--better than he thought it would. But it still faces hyper-inflation and unemployment with further reforms this year.

“Things will be worse next winter,” he said. “There is no reason to think they will be better and every reason to think they will be worse. . . . I don’t see anything that makes me think there is going to be more food, more production, more energy.”