Is Russia Y2 K Ready? Don't Bet On It

Moscow is short on plans--and money--to battle the bug

The Russian Defense Ministry will be ready. So will the Atomic Energy Ministry, the gas and electricity monopolies, and the oil industry. To hear Russia tell it, there will be no problems when the clock strikes midnight on Jan. 1, 2000. But from the Central Intelligence Agency to European utilities, there's concern that Russia is in denial.

Analysts fear nuclear power-plant shutdowns and other millennium near-disasters. Gartner Group Inc., a Stamford (Conn.) technology consultant, predicts that 80% of Russia's transport systems could face delays. Natural gas supplies to Europe could run short. A committeecreated by Prime Minister Yevgeny Primakov says that what Y2K problems remain will cost $3 billion. But even if Russia miraculously finds the money, it's too late to fix everything.

Multinationals are scrambling. Some are buying diesel generators; others are stockpiling inventory. Such efforts are unlikely to avert an earnings hit. Mitchell Krasny, CFO of SUN Brewing Ltd., an Indian company with 14% of Russia's beer market, says Y2K will be as bad as August's ruble devaluation.

Tensions between Russia and NATO over Yugoslavia could jeopardize a joint early-warning program in the U.S. and Russian defense systems. Pentagon managers are meeting with Russian officials to explain how the U.S. has made its systems Y2K compliant. "But in the current climate, even this may not last," says a U.S. official. Y2K is one more crisis Russia is ill equipped to handle.