Rock in a hard place: Rank joins Russia bun fight

As investing in Russia is back in vogue, leisure company The Rank Group is taking the plunge with the opening of Hard Rock Cafes in Moscow, St Petersburg and Riga in Latvia. Last week Scottish & Newcastle also looked eastwards and bought Finnish brewer Hartwall, which owns 50 per cent of Russia's leading beer maker, BBH.

Rank Group has entered into three revenue-sharing franchise agreements with Doug Steele, a Canadian entrepreneur who owns several bars and clubs in Russia. In Moscow, a three-storey bar and restaurant is being built and will be one of the largest Hard Rock Cafes in Europe when it opens later this year. Mr Steele has also signed a franchise agreement for St Petersburg and Riga in Latvia.

After Boris Yeltsin's tumultuous, alcohol-fuelled presidency in the 1990s, and the Russian financial crisis in 1998, investors had been wary. But a period of unusual political stability under President Vladimir Putin and a crackdown on corruption has prompted growth in gross domestic product of 15 per cent during 2000 and 2001, and foreign investors are again entering the region.

Last week the Organisation for Economic Co-operation and Development described the Russian economy and government as "successful". But the OECD did sound a warning note: "While Russian entrepreneurs struggle with many of the same problems as small businesses in other countries, one striking characteristic of Russian small business surveys is the number of complaints of harassment or extortion by various state organs."