March 12, 1991

Walter H. Annenberg, publisher, philanthropist and formerly United States Ambassador in London, said yesterday that he would bequeath roughly $1 billion worth of paintings to the Metropolitan Museum of Art in New York. The gift, which would be the largest single donation in more than a half-century to the museum's department of French Impressionist and Post-Impressionist paintings, includes Mr. Annenberg's entire collection of more than 50 paintings by Manet, Degas, Monet, Renoir, Toulouse-Lautrec, Cezanne, van Gogh, Seurat, Gauguin, Bonnard, Vuillard, Matisse, Picasso and Braque.

A week ago three Iraqi soldiers pulled me and a colleague from our Land-Rover in southern Iraq, shoved us into the back seat and sped off into the desert. For the next first few moments, confronted by an Iraqi colonel who had his soldiers loot our vehicle in front of us, it seemed as if our lives hung by a precarious thread.

For Sale: Thousands of eastern German companies, most in dilapidated condition with disputed ownership, dubious management, outmoded products, vanishing markets, heavy debts and thousands of unnecessary employees. Everything from beauty parlors to shipyards must go. If the Treuhandanstalt, the German Government agency administering privatization, were to advertise its offerings, the result might look something like that. Not surprisingly, it has found few takers for the 8,000 industrial concerns it owns. Instead of creating a second "German economic miracle," as Bonn hoped, privatization is mired in legal problems and bureaucratic bickering.

As a medium-sized maker of paper-handling equipment, the Zerand-Bernal Group Inc. of New Berlin, Wis., has been stung by its share of deadbeats. But company executives say that in all their years of running a business they have never faced a debtor as recalcitrant as the Union of Soviet Socialist Republics. Zerand delivered equipment late last year to two Soviet factories that make food containers, one in Minsk and the other in Kishinev. The company says it has since spent $20,000 on lawyers for dunning letters, but it has not received any of the $32 million promised in its contract with Tekhnoeksport, a Moscow foreign trade organization. The first payments were due in September; the last payments at the end of 1990. A Year's Worth of Sales "We've written a lot of letters, but we haven't gotten any response," said Kenneth N. Allan, the project manager for Zerand, which is a division of Stevens Graphics Corporation of Fort Worth. He said the outstanding Soviet bill represented more than a yea's sales for Zerand, which makes machinery that folds cartons. Zerand is not alone. The Commerce Department says about 20 other companies are owed money for goods delivered to the Soviet Union. Such overdue bills total more than $100 million, with many of the debts about a year old. Zerand is owed the most money by far and is by far the least experienced in trade with the Soviet Union. A Commerce Department spokeswoman said a handful of companies have been paid in the last few months, but a similar number of companies have joined the list of those unpaid. The companies affected are all small and medium-sized ones that specialize in providing hard-to-obtain equipment, like electronic and scientific gear, on short notice. Experts say the Soviets have been more careful about paying large companies for fear of jeopardizing long-term business relationships. Not surprisingly, relations between the Soviet Union and the smaller companies have been strained. While the smaller companies do not carry the weight of an International Business Machines Corporation, they fill important niches in the $3 billion worth of exports sent to the Soviet Union from the United States. Oleg Enoukov, the deputy representative in New York City for Vneshekonombank, the Soviet bank responsible for foreign exchange, said the payment delays were an accidental offshoot of his country's first steps toward economic restructuring. "We are in the initial phase," Mr. Enoukov said in a recent interview. "People are accustomed to receiving state support. They have to change their mentality." In a recent interview with Reuters in Moscow, a Deputy Foreign Minister, Ernest Obminsky, said the nation had no problem meeting its own debts, but acknowledged, "We do have a big backlog in paying back debts between companies." Soviet officials say it is difficult to estimate the total commercial debt arrears, but they say the bills are gradually being repaid and that the situation has not worsened since November. Now, behind Zerand's lead, at least eight companies have agreed to pool their knowledge on trading with the Soviet Union in a determined effort to collect what they are owed. It looks like they still have a way to go. They were hoping that Senator Bob Kasten, Republican of Wisconsin, would take up their cause and make payment of such debts a condition of extending new United States credit to the Soviet Union. Trade experts said companies in Germany, Italy and other European countries that were owed money on Soviet contracts were bailed out when their governments extended credit to the Soviet Union, with part of the money designated to pay the bills due the companies. U.S. Action Called Unlikely Unfortunately for the American companies, trade experts say there is little likelihood the United States will be extending new credit to the Soviet Union soon, because of concerns over Moscow's crackdown on the independence movements in the Baltics. An aide to Senator Kasten said there was little the Senator could do on the matter. One measure of the frustration felt by executives of the American companies is their discarding of some of their shyness about publicizing their troubles. They had feared ruining their relationship with the Soviet Union, but now in interviews the executives describe a situation that leaves little room for maneuvering. "This has caused us a great deal of difficulty," Mr. Allan said. "We are entering a depression; capital goods are not doing so good." He added, though, that the absence of the $32 million owed his company would not hamper operations. Until recently in the Soviet Union, contracts involving a foreign company could take years to negotiate. The Soviet side would usually be represented by a foreign trade office, while the foreign company would be represented by an import-export company. But once a contract was signed, payment from a central bank in Moscow was sure and certain. Now, trade experts say, the Soviet agencies have more freedom to make quick business agreements with foreigners, but those agencies have to find the hard currency to pay for the goods and services. A shortage of hard currency has in the last year caused repeated reports of delayed Soviet bill payments around the world. "They did not plan ahead, and got into trouble," said Daniel L. Bond, the vice president who conducts risk analysis at the Export-Import Bank. The American companies say they had no warning of the change. "We are old-timers who dealt with the cream of the crop of companies," said one East Coast importer, who would speak only on the condition of anonymity. "Our clients were told they are on their own after the fact." This executive said his nine-year-old company was on the verge of declaring bankruptcy and badly needed the $70,000 it was owed from its Soviet deals. Michael A. Herzen, president and founder of Techcare Systems Inc., a San Francisco-area company that sells medical and laboratory supplies, said a total of nearly $1 million had been overdue for nine months from various Soviet ministries. He said the equipment his company delivered was already in use in the Soviet Union. "We haven't tried to get it back; we've tried to get the money back," Mr. Herzen said. Techcare's plight shows how few options are available to the companies that are owed money. Most say they are confident that they will be paid; they just do not know when. They can wait and hope the United States Government will intervene, or try to demand payment through an arbitration process. Considering Arbitration Mr. Herzen said he was contemplating appealing to the Soviet Chamber of Commerce, which was named the arbitrator in his company's contract. But he said such a move might end his Soviet business dealings. "The purchasing agencies buy most of the stuff, and you can alienate them forever, and they will not do business with you," Mr. Herzen said. Having learned from past mistakes, Techcare and other companies, like Planet International Import-Export Ltd. of New York City, now make Soviet enterprises pay in advance or provide a letter of credit that assures the money is available once the goods are delivered. But using such terms in contracts has reduced business by more than half, said Harold Weiner of Planet, who said his business was owed about $1 million.

INTERNATIONAL The U.S. and Britain reached an accord that will have a broad impact on trans-Atlantic airlines and passengers. One immediate result is that two weak airlines, Pan Am and T.W.A., will be able to complete the sale of London routes for needed cash. Experts say that over the long term, travelers will benefit, as will the British. [ Page A1. ] Britain's Transport Secretary said "a massive package of benefits" had been wrung from the U.S. Small Virgin Atlantic rejoiced, but giant British Airways reacted angrily. [ D11. ] OPEC ministers jousted over cutting production quotas, but failed to reach an accord and scheduled a meeting for today. [ D1. ] Many U.S. experts are hoping for the same things some OPEC members want: an agreement that will hold down production. [ D6. ]