Avos'ka

The avos'ka has disappeared in Moscow. That's a little net bag all Soviet citizens carried just in case they stumbled across something worth buying. The word avos' means "little luck" or "just maybe," as if being whispered by someone betting while the roulette wheel spins.

"Hey, Tanya, look over there. People are lining up. I wonder what's for sale. My god, bananas!" Out of purse or pocket came the avos'ka and a kilo or two could easily be lugged away. Not that anyone could eat that many, but bananas could always be traded for something else.

In the USSR goods suddenly appeared in stores and just as suddenly disappeared for months. The avos'ka was every citizen's survival tool.

Fifteen years have passed since the USSR's collapse and Russian stores, supermarkets and street vendors have lots of everything. Oranges were for sale in Moscow yesterday; they can be bought today; and they'll still be for sale tomorrow. They're expensive, though. When paying, a Russian might exclaim, "Ouch!" or something stronger. Still, no Russian carries an avos'ska today; they're not even sold in stores.

In July 2006, things changed. Suddenly imported wines and other alcoholic beverages disappeared from store shelves. Rumors began to fly. Money, corruption, KGB, insider deals spiced the rumors. The Russian press began digging to get to the bottom of what seemed to be a new Kremlin scandal.

From the newspapers -- Russian TV has largely ignored the story -- we now know some facts. All imported wine disappeared from stores because the federal government tried to counter mislabeled alcohol and counterfeit tax labels with a new, high-technology labeling system, the EGIAS (Unified State Automated Information System). The system would allow tax officials to ascertain in real time the legitimacy of every bottle of alcohol sold on the Russian market.

News of the government's involvement didn't surprise many Russians. While Americans continue to hope their government's poor response to hurricane Katrina was an anomaly, Russians expect their government to bungle everything. It's almost a source of perverse national pride. "They wanted better, but it ended as it always does," lamented one newspaper. Russians know that if bureaucratic bungling were ever introduced as an Olympic sport, they're set for gold, silver and bronze. Americans might be catching up, but Russians are convinced they're still far ahead.

According to Russian press reports, the Kremlin awarded a lucrative anti-counterfeiting contract to the Atlas Scientific Research Center and, in the best traditions of politically connected Pentagon contractors, their system wasn't ready for prime time. A new law required, however, that it be introduced. With no wiggle room, the Russian government forced stores to pull all bottles with the old tax labels from their shelves. The new system doesn't work, so the shelves have stayed empty.

The Russian press, always assuming that hidden flows of money and favors explain most government policies, began to dig. Who is Atlas Research? How did they get this contract? Which top government official signed off on it?

Newspapers discovered that Atlas Research was founded in 1951 as a secret KGB research facility working on secure communications. Journalists' suspicions grew, for most Russians view the partially-hidden network of ex-KGB officials in business and government as unusually powerful.

Yet, Atlas Research is a reasonable choice for developing an anti-counterfeiting labeling system. According to the Atlas Research website, it's a state-owned, FSB (Federal Security Service, or today's KGB) research institute that, in addition to being Microsoft's partner in the Government Security Program, has worked on developing secure excise tax labeling since 1998 and authored the government's prior system. In 2002 the company was even granted a patent (Application number: 2001107946) for a "System Of Protective Marking And Document Verification" that closely resembles part of the disastrous EGIAS.

A charitable interpretation -- after 70 plus years of Soviet rule most Russians view charitable interpretations as a type of fairy tale -- of the contract award would note that the Soviet and Russian governments have tried for years to convert former defense research establishments into money makers. Top-secret organizations were encouraged to expand into civilian markets. If Atlas Research were able to develop EGIAS, it could become, perhaps, a world leader in a new technology. That dream may have motivated some of the officials behind the contract award. Of course, how those personally involved might gain financially remains unknown.

Not surprisingly, Atlas Research stumbled. It has little experience in creating a systems integration project on the scale of EGIAS. The firm's strengths, and Director Girichev's interests, center on coding and encryption, not on inventory management systems.

Quite possibly Atlas management's enthusiasm for its own sophisticated marking technology blinded it to the importance of the less innovative, but equally necessary software work. The Russian press gleefully quoted extensively from a users' forum where Atlas programmers arrogantly told EGIAS users: "If you don't like our interface, go sell milk."

Investigating Russian business dealings resembles peeling an onion. As each layer of a deal is peeled back, the flowing tears make it harder to see clearly.

Domestic Russian alcohol producers, mostly vodka manufacturers, came under EGIAS in January. There's lots of Russian vodka in the stores and it now sports the new tax labels. How did EGIAS work for them and not for wine importers? Vodka producers, clearly more important to Russian voters than wine importers, evidently received permission to go to some sort of manual system. How that works isn't clear.

Peeling back one more onion layer reveals that some wine with new tax labels has suddenly appeared in stores, but only from a few of Russia's importers. How did they get EGIAS to work for them?

Whitehall is one importer that got some new labels. Its president, Mark Kaufman, started his business in the early 1990s when success required energy, sharp elbows and good friends. He graduated from a Moscow communications school and first worked at a Soviet broadcasting research institute. The Whitehall website notes that Kaufman acquired a 51 per cent ownership of his importing business, but doesn't identify his other partners.

Conspiracy theorists flourish in Moscow and they would focus on Kaufman's communications industry background and Whitehall's unknown investors. "Ha, Kaufman engineered the EGIAS disaster to increase Whitehall's market share," they'd conclude. That's quite a leap. Whitehall was already well positioned in the market, and the risks of such large-scale shenanigans seem greater than the benefits. Others might see Kremlin intrigue, "Someone's out to get Gref, Minister of Economic Development and Trade," they'd assert.

I can't make heads or tails of this scandal. Some experts predict that Russia's wine market won't return to normal until early next year, so I've decided to find my old avos'ka. After all, I never know when I might stumble across someone selling good French wine.