Dateline: Moscow, Russia: Hungry for success under a new order

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IT WAS not a business proposition for the fainthearted. You had to handle clients who danced drunk and half-naked on your fittings. You had to scare away corrupt officials, eager to pocket a cut from your profits. And when the cops fired their AK-47s into your ceiling, you had to react calmly and cordially.

For more than three years Doug Steele, a Canadian entrepreneur, not only handled but positively revelled in these conditions as the proprietor of the Hungry Duck in Moscow. Located within yelling distance of the Kremlin and the Lubyanka, nerve-centre of the Russian security services, it was widely billed as the raunchiest bar on the planet.

And it probably was. It is certainly hard to imagine anything much weirder or wilder. Mr Steele imported to Russia the concept of Ladies' Night - only his ladies were hundreds of young Muscovite women who were allowed to drink free for two hours, cheering wildly while a troupe of male strippers performed.

Only after this tawdry performance ended were men allowed in. By then, the scenes were bacchanalian; almost all the women would be dancing on the beer-soaked bar and table tops while the management looked on approvingly. There was no stranger sight in Moscow.

It became an emblem for the lawlessness, moral disorientation and hedonism of the new Russia. As the Hungry Duck's notoriety grew, aided by the occasional fistfight or shooting, so did its profit margins - even though, according to the Moscow Tribune newspaper, its $2.8m (pounds 1.7m) in gross annual sales were nibbled at by an outlay of $120,000 (pounds 73,600) in bribes. But last month it closed.

It was no longer suitable for Russia's political climate, which has become far more austere since last year's financial crisis. The Hungry Duck caught the disapproving eye of parliament: a delegation of MPs walked in as a male stripper was performing simulated sex to the Soviet national anthem. After complaints in the chamber, reported on national news, Mr Steele realised the game was up.

Thus he joined thousands of other businesses in Moscow and beyond that have been forced to adapt during the last eight months.

For most of these, however, the main blow was Russia's debt default and rouble devaluation last August, which left millions of people with funds frozen in the banks. The impact has been immense: since then, small and medium-sized businesses have laid off an estimated 1 million part-time staff and 14 per cent of full-timers.

To that should now be added the Balkan conflict, which will scare off yet more Western investment and further emaciate the service industry.

One travel agency said last week that it again had no orders, after fighting to recover from last year's upheaval. Survival, rather than profit- making, has become the name of the game - and the secret to that is adaptability.

A year ago, when Moscow (unlike most of Russia) was enjoying a minor boom, Grigory Baltser opened a shop called World of New Russians in a chic and expensive new underground shopping centre next to the Kremlin. He wanted to cash in on the market for amusing gifts by parodying the small, very wealthy, often criminal, class of nouveau riche.

His stock includes a $1,900 (pounds 1,100) ceramic chess set in which the pieces are armoured jeeps and hoods in sunglasses, and traditional lacquer boxes showing porcine Mafiosi in a steam bath, mobiles pinned to their ears. He was aiming at the buyer with cash to spend on frivolities, so the events of last August could hardly have been more damaging.

But Mr Baltser, 35, moved quickly. He left the shopping centre for a more modest location and has temporarily trimmed staff salaries - a move that, being without real trade unions, Russian workers are astonishingly willing to accept. He has yet to make a profit, but says he is breaking even.

"We are survivors. Yes, it is a bad hit, but I am not pessimistic. We are simply going through a period of correction," he says.

But it is not easy. Bureaucracy and corruption militate against quick changes. According to Irina Khakamada, a Russian politician and economist, it takes three months to register an enterprise - four times longer than in Poland, which is comparable in terms of per capita GDP.

And fire, sanitary, health and tax inspectors and other oversight agencies on average pay four times more visits than their Polish counterparts.

But is Doug Steele adapting too? The answer is Yes. He is said to be concentrating on a more orthodox bar named Chesterfields while drawing up plans to open another, to be called the Swinging Frog.

Nor has he given up hope that the Hungry Duck will rave again. He is mulling over a revival, not in Russia but in the benighted world of neighbouring Belarus, a police state.

That's optimism, for you - an indispensable quality if you want to do business in what used to be the Soviet Union.