Daniel Satinsky: So, let me ask you just to begin with how did you first become involved with Russia or Russia-related activities?
David Edick: It goes back to my university training. I trained as a global political economist at a university that didn’t have such a program. I found a way to combine history, political science, and economics with an international focus. I designed—
Daniel Satinsky: And what university?
David Edick: San Diego State.
Daniel Satinsky: And what years?
David Edick: Oh, gosh, ’82 through ’85.
Daniel Satinsky: Okay.
David Edick: I transferred down from San Jose State. I went from being a meteorology major to kind of quasi political science, business, and decided to chart my own path to be an investment banker, which I thought was a global political economy, to be able to work across silos, because political science didn’t talk with the econ guys just on the next floor upstairs, and the econ guys didn’t talk with poly sci, and it was really kind of a joke, a bad joke, so I decided that in order to be effective, to be educated and be effective I needed to cross silos. So, I did that, and that was at the time that the wars in Central America were going on, and my mentor had some big contacts there. And there was a Soviet political systems old guard professor who I enjoyed his work, and so I’ve been in the thread really since the ‘70s of being aware of geopolitics and learning about the world and the Soviet Union.
And then it picked up. I got in with the…I thought the world of the environmental movement was going to be an opportunity for me to work with. That turned out to be a huge disappointment. So, just at kind of the moment that the wall in the East began to shudder or dissipate with the Polish roundtable, the summer of ’88, I joined with a group called Science Solutions here in San Diego in 1990. They asked me to come on board and be their director of development. And the purpose of that company was to bring high technology processes and products out from the Soviet Union to the West, particularly the United States.
Daniel Satinsky: Wow. And this was what year?
David Edick: 1990.
Daniel Satinsky: And who founded that company?
David Edick: James Baur.
Daniel Satinsky: James Baur.
David Edick: Yeah, B-A-U-R. He’s still alive. In fact, he’s going to…there’s going to be a reunion of Science Solutions in September here in San Diego. If you’re looking for businesspeople to interview, he’s going to have some perspectives.
Daniel Satinsky: If he would give me an interview, that would be very interesting, because obviously he has a story about, first of all, how he had those connections in the Soviet Union, and then how to bring out intellectual property from the Soviet Union is an interesting story.
David Edick: Well, it was quite a ride of exploration and discovery. Jim’s roots are out of General Atomics here in San Diego, which is a… He came out of the nuclear engineering program as a physics guy and knew scientists in the Soviet Union in the world of physics, and nuclear sciences, and the space program. General Atomics, in addition to doing nuclear stuff, more commonly today is known for drones or things of that sort, so aerospace. It’s a defense nuclear engineering company.
So, he came out of that and knew people, real scientist guys. He had some great contacts in Leningrad, St. Petersburg. But it was a long road to figure out… You know, academics in the United States and in the Soviet Union have negligible commercial experience or perspective. It’s a real learning curve to climb. And culturally in the Soviet Union there was negligible commercial experience, particularly in the Russian space. Armenians and Azerbaijanis and all Central Asians had a different feel for it. So, anyways, it was a lot of education.
Daniel Satinsky: And did you speak Russian at that time?
David Edick: No.
Daniel Satinsky: So, it was all through translators.
David Edick: Yeah, I had…so in this latter environment period I had… I was a known quantity at San Diego State as being an unusual guy who knew a lot of stuff. I was very creative. As a student, as a non-PhD student. So, I was around the Arid Lands program, which was a Jordan, Egypt, United States effort to—it was an Israel, Jordan, Egypt, United States effort to collaborate around the issues of water, to find a way to work together and build trust and build connections. And I thought that was a great idea, and I thought… I tried to put together a connection between San Diego State and a university in Wroclaw, Poland. And then jumped over to parallel the Arid Lands program with a California, Uzbekistan water management exchange project.
Daniel Satinsky: Wow.
David Edick: And there were a lot of good people at San Diego State and in San Diego on the water issue. I could just…many of the pieces or modules were right there with the Arid Lands program, so I thought well, you know, the politics are flowing in the right direction now. And this was built particularly around the crisis at the ROC. So, I spent the better part of a year trying to put that together, kind of as I was leaving the academic world. I did some Latin American debt stuff in looking at debt for equity swaps around Brady bonds in the late ‘80s, so I did some contract work. With a B.A., you know, so, I mean, it’s like all these PhDs were like who are you? And it’s like you haven’t drunk all the Kool-Aid yet, you don’t have all the certificates and so we’re not sure whether we should treat you seriously. Okay.
So, it turned out that the institutional, I guess, resistance to this kind of effort with Uzbeks and all, it was too steep a climb for me to do. But I got to know a lot of people. And Jim Baur with Science Solutions came to me, and we met over lunch. I had developed… Nobody knew anything, okay, so for the Uzbek-California thing, nobody knew anything, so get to work, you know, study, research, build a puzzle, find the pieces, put them together, so I got a bit of a reputation out of that.
And Jim said well, you know, you straddle this academic-commercial world, why don’t you come be our director of development? For a small company that’s like change toilet paper and everything else that needs to be done at that time but help guide the group of science guys into understanding the sociopolitical culture, how things were evolving, where new sources of funding might be, business support programs, and customers. How to go from…how to find potential customers for these technologies. At the Leningrad Institute for Optics and Fine Mechanics, or Fine Mechanics and Optics
*—you can check me on that.
That was a very advanced place on the planet, and the people that were there at the time ultimately created the lenses that are used in fiber optic systems all around the world. They are multiple mega millionaires, and a billionaire came out of that. And we ran through the resistance here of well, the Soviets are idiots, they are communists, and nothing good commercially is going to come out of there. But the science guys knew differently. But again, we’re trying to bridge between science, to applied science, to commercial stuff. And on the commercial side a lot of these companies had defense business as part of their order book, if you will. That’s part of their business. And most of them were scared to talk with us because they didn’t want to bring any complications to their existing business. So, they were like, you know, this is interesting, very intriguing, but…
Daniel Satinsky: Yeah. Did you play a role in bringing those lenses and those guys into market?
David Edick: No, no. We got close. In business, I don’t know, luck matters a lot.
I hear all the stories about I’m god’s gift, and I just, I’ve got it. Luck plays a huge role. And there were other people around. And ultimately, for the most part, the Russians, they just found their way by the force of circumstances. And that’s part of why they’re kind of tough right now. So, we—
Daniel Satinsky: So, Science Solutions, did you have any successes out of Science Solutions?
David Edick: There were some. Jim would be able to tell you a whole lot more about that. We came at the—my involvement, once I really understood what was going on—and we hosted some delegations here. I mean, we… You know, what is success? We put together some fascinating relationships out of the connecting between the U.S. and the Russian space program. Roald Sagdeev and Susie Eisenhower, and there was a marriage there. One of the Eisenhower ladies and… But this was at the time of glasnost turning into perestroika, and the deeper perestroika…
So, there was an underlying crisis in the Soviet Union anyways that’s completely not understood here in the West. I don’t think the Russians have a good handle on it, either. But there was a crisis that the mirror, kind of weird mirror of inflation in an economy was goods disappeared. They did. The common thing is to call them, well, they’re damn communists and they couldn’t make anything anyways. But there was more going on than that. So, things were fraying pretty seriously. And the guys that—and they were mostly guys, there were a few women—were increasingly scrambling, and their time horizons were getting narrower and narrower and narrower, shorter and shorter—you know, can we do a deal? Some sort of container of this, or some computers of that.
And what really kind of ended things for me at Science Solutions—and I’m condensing things here—the coup, the Soviet coup in August of 1991, changed everything. That was the end of the Union. And it was the end of all of these Union structures that we had been dealing with, all these Soviet Union-level scientific institutes and relationship structures, whatever funding that was part of it, but it was mostly the institutional connections. They were…what I tried to explain was that they’re there, but they’re not there, and they’re going to go away, and it’s going to be in months. And all these groups that we’ve been working with are going to go. And I was told to stick to my reports, so I was like okay, I got it.
Daniel Satinsky: And how did you know that?
David Edick: I just knew. You know, my background is more on the sociopolitical of it. I mean, that’s… When the wall to the East… With the thing with Poland, that opened the door, and I could feel it. Very few could. I don’t know, it just…
Daniel Satinsky: Well, go back to what you said about the underlying crisis. How would you describe that underlying crisis? What was it?
David Edick: Well, it was firstly and foremost an economic crisis in a non-market system where, up until the 1960s, the Soviet Union was, in this communist era was about industrialization, electrification, workers, the proletariat. It wasn’t about oil or gas. Natural resources were wood. You can make paper or… I mean, yeah, there was Baku and everything, but it wasn’t until the discovery of the super giant fields in West Siberia that the Soviet Union changed in a really important way. And one of these days somebody will dig into it. And I think it changed very importantly the internal structure, the drivers, the economic drivers, because the resources that were competitive in the system, suddenly energy became dirt cheap, and the focus of the economy moved more toward the development of this new energy.
I mean, yes, the Russians got in—the Soviets got into exporting a fair amount of oil, maybe 3 million barrels a day, I think, somewhere in the mid ‘80s, but it was mostly a domestic thing, and it was… I wonder if it was a version of Dutch disease. That was explored with the Dutch and the Groningen gas field, and the impact that that had on the Dutch economy, and the value of the guilder, and how it suddenly made Dutch manufacturing uncompetitive in Western Europe, which was like, what? What? Something is really weird here. But then the Europeans went to the European Union and things changed. The rise of oil and then gas changed the character of the Soviet economy I think in important ways.
Daniel Satinsky: That’s a great insight. No, seriously, it’s a great insight, and one that I have—and I can’t claim to have read everything written on it, but I have not encountered that before, so I think that is something for some future PhD researchers to go into.
David Edick: You know, and Russia’s best years in the post-Soviet time, as Russia was reinventing itself, re-gathering itself together, was when oil prices, you know, 1998, ’99, 2000, oil prices were in the tank. Russian oil production was beginning to recover, but oil prices were seriously in the tank.
Daniel Satinsky: Right. It was like down to $15, $16, and maybe even less.
David Edick: Yeah. And the ruble was garbage. And that was when Russian manufacturing took off. Suddenly there was demand, okay? Enough to drive suddenly competitive human and material resources, manufacturing, which is machines and people. So, anyways.
Daniel Satinsky: So, you left Science Solutions.
David Edick: I left Science Solutions basically September 10, 1991, when we participated in a trade show that was part of the signing of the San Diego-Vladivostok Sister City Agreement.
Daniel Satinsky: Ah, which was when, 1991?
David Edick: September 10, 1991.
Daniel Satinsky: Okay, yeah. Signed that agreement and then left the company?
David Edick: Right. There was a delegation in town of big, serious guys. These weren’t clowns. These were the cream of the crop out of naval, maritime engineering, the best guys. And there were some very good ones, some forward—Vladivostok is unlike any other city in Russia that I’ve ever visited. Odessa is something like it.
Daniel Satinsky: I was in Vladivostok in June of 1990.
David Edick: Oh, wow. Wow. [
Laughs.]
Daniel Satinsky: Yeah, so I was there. I don’t want to digress too much, but I did a mid-career change and got a master’s degree at the Fletcher School of Law and Diplomacy, and the Fletcher School held a North Pacific seminar in Vladivostok. And we flew to Moscow and picked up people and then went to Vladivostok for this seminar when the city was officially still closed, I think. So, I saw it then. It was a very interesting experience. So, who initiated the sister city?
David Edick: It comes from the arts people here in San Diego. James Hubbell, who was an acclaimed sculptor-artist. There’s a—you ask a really good question here, actually, and I can’t answer it the way I’d like to. There were some arts university connections, just a few people. How they knew each other I don’t know. But it’s these early days of… It was in the arts and culture.
We had a—oh, I think I know where it came from. There was a Soviet arts festival here in San Diego in 1988. The mayor got behind it. It was a big deal, very successful, and people from all over the Soviet Union came here with acting, poets, art, you know, painting, all kinds, sculpture. And I think it’s out of that people got to know each other, just a few connections.
And then there was a Soviet navy visit here in 1989 which kind of juiced that, because the Soviet navy ships were carrying boxes of art. [
Laughs.] As captain’s cargo, basically. Which is a cool thing in the world of maritime. The captain can carry commerce that is not part of the bill of lading, is not part of the register. And it’s a way to kind of get things back and forth.
Daniel Satinsky: Right.
David Edick: And on the Soviet side, Gorbachev’s press secretary, Gennady Gerasimov—there’s a legendary hot tub meeting, James Hubbell and others, Gennady Gerasimov. But anyways, Gennady Gerasimov was asked what a good sister for San Diego might be, and he said Vladivostok would be great, two big navy ports.
Daniel Satinsky: Ah, okay. This hot tub encounter wouldn’t have been through Esalen, was it?
David Edick: I don’t think so.
Daniel Satinsky: Okay.
David Edick: It’s an interesting idea. And I don’t… This pre-dates my active involvement. These early historical days, as we’re coming up on the 30th anniversary of the program, yeah, it’s…
Daniel Satinsky: I can actually check that because I know the director of the Esalen program, but it would have been an interesting thread to pull here. But it doesn’t matter. But there was a mutual interest on each side in putting a sister city together that wasn’t particularly commercial.
David Edick: Not at all. Not at all. This is like how do we get beyond the Cold War. We’re ending the Cold War, and how do we build bridges. And in fact, the first big project of the sister city program was a space bridge. It was a live two-way satellite telecast between a theater audience here in San Diego out at Sea World and at the Gorky Theater in Vladivostok. I mean, there were thousands of—
Daniel Satinsky: Do know when that was?
David Edick: January 22, 1992.
Daniel Satinsky: January 22, 1992, okay.
David Edick: Yeah, 22nd, 23rd.
Daniel Satinsky: Okay, because there’s a whole history of space bridges. Beginning, actually, with the US Festival, and Steve Wozniak, in the early ‘80s, and then later morphing into increasing numbers of these through people who formed Internews. So, this is another piece to the puzzle.
David Edick: There was a guy named Goldin, a Russian—
Daniel Satinsky: Joseph Goldin
1234David Edick: Joseph Goldin, yeah.
Daniel Satinsky: Whoa.
David Edick: He was the guru that kind of made it happen. If it wasn’t for this Russian speaking operator in Pittsburgh, nothing would have happened, but Goldin was the guru that imagined it, and it was his force of imagination and force of personality that pulled it off, pulled it together.
Daniel Satinsky: And so, this was the first activity of sister cities, was this theater exchange?
David Edick: Well, it was two audiences. There were maybe one, two thousand—a thousand people at Sea World and a full—the theater at Sea World was full. The Theater Gorky
* in Vladivostok in the middle of the night was full. And it was the opportunity…it was…I mean, we were looking at each other like this, you know, only with a cast of thousands. And it was such an amazing thing. Everybody was in awe of the moment to do this without any intermediation. It was people to people on…beyond imagination. So, it was an electric time. It’s hard to describe the energy. I mean, I get chills thinking about it. So, that was the first big effort.
And then there was…the next big project was in May, which was a planeload of 177, whoever could get on the plane in Vladivostok, and 55 members of the Russian Pacific fleet song and dance ensemble. They kind of provided the kind of the artistic and…I don’t know, it was a splash. But it was mostly geared toward business.
Daniel Satinsky: And where did this take place? In San Diego?
David Edick: In San Diego. This was multiple days. We home hosted people. And I was…my assignment was to help find partners. We were looking to have tables of people, and rooms of people with shared interests, and trying to facilitate some discussion. Where do you start? Well, it helps if you have something to talk about, and you go from there. So, that was…
Daniel Satinsky: And there was…business matching was sort of part of this?
David Edick: Absolutely. It was the key. That was the centerpiece of it. Because we’d moved beyond the, you know, I mean, the Soviet Union had broken up, the Cold War was over, the military stuff rapidly moved to the side and disappeared, and it became all commercial, all about making a buck, mostly a quick buck.
Daniel Satinsky: Yeah.
David Edick: And between the space bridge and the planeload of 177, space bridge being in January and the plane coming in on April 20, 1992, I had met a Russian guy at a party to celebrate the space bridge. This was a party in northern Baja, across the border to Mexico here. There was a guy standing looking out over the sunset, you know, looking at the Pacific, and I’m like that’s a Russian, I’m going to go talk to him. And it’s a guy my age. And at the time I’m 30. And we got to talking, and he was a representative, it turns out he was a representative of the commercial wing of FESCO Shipping Company, which had been spun off into a group called OCFES, and he was part of that commercial group. And they were really the biggest private commercial group in the Russian Far East at the time.
And we hit it off. We spent a month going all over San Diego, talking to everybody that we wanted to. Every door was open, political, business, but focusing on business. This is opportunity. It’s not about getting rich at this point; it’s we can do something. I mean, we can build a career, we can build something. And it was so exciting. And through Pavel Morozov we formed—
Daniel Satinsky: That’s the name of this guy?
David Edick: Yes.
Daniel Satinsky: Pavel Morozov, yeah.
David Edick: Pavel Morozov. We formed a small, we formed a California company with another local entrepreneur, called it Russian Pacific Services, and ran with it. And that was the vehicle that took me to Vladivostok in June of 1992.
Daniel Satinsky: Representing your company.
David Edick: Yep.
Daniel Satinsky: And you moved there to live or to travel back and forth? What was that relationship?
David Edick: So, I went for a two to three week visit to see the city and explore what was possible.
Daniel Satinsky: And this was your first visit to Russia?
David Edick: Yeah. And, you know, wow. [
Laughs.] A lot of details here I’ll leave aside, but to stick to the commerce stuff. So, I went for two to three weeks. They had provided me an interpreter and a car with a driver. But between… Pavel had come down with a heart condition, a serious one, and he suddenly was out of the game. And the other guys at OCFES, the management, senior people at OCFES were like yeah, we get Australia, we get New Zealand, but, you know, we haven’t figured out what use the Americans are commercially. So, they were very hard-nosed, really commercial. And I liked that. I mean, they were focused, very focused on what was going to work, not talk, not MOUs or anything like that. It’s like, you know, we want to move containers, and we want to make money, we want to do it profitably. That’s why we’re here. That’s why you’re here. [
Laughs.] But I ended up…
Daniel Satinsky: So, in order to do that you had to have demand in the U.S. for goods or products from Russia that would come through the port of San Diego, or you needed goods that were required in Russia that would be shipped the other way, maybe, by FESCO through the port of San Diego, correct? That’s what you were looking for?
David Edick: I had moved well beyond that at that point. I knew very early, you know, San Diego has a modest commercial port. It’s a military port. It’s a navy port with a bit of commerce bolted on. We have a port district here. Their big business is real estate and tourism. And it’s big. They do…they have built some commercial stuff. But even at the time it was pretty minimal. And when it comes to international trade it’s logistics, logistics, logistics, and where do the ships go. Markets are important, but if the ship don’t go there, you better find a truck or whatever.
So, really pretty quickly, you know, the big West Coast ports, L.A.-Long Beach, Oakland, Seattle-Tacoma. And FESCO had an office in Seattle. And ultimately the Russians had a consulate in Seattle, very quickly, actually. And the commercial connections developed very, very quickly with the Pacific Northwest, particularly Seattle as a transit port for mostly consumer goods. I went to Vlad[ivostok] to find out…to learn about the market. We weren’t looking to bring anything out. Everything was going in. And that’s really always been the challenge for trade between the United States and Russia, is that there’s not much that’s going to come this way. It’s just the structure of the economy. What’s coming now is—you’re in Boston?
Daniel Satinsky: Yeah.
David Edick: Fuel oil, diesel. Almost a million barrels a day is coming into the Northeast out of Russia.
Daniel Satinsky: Wow.
David Edick: Russia is now the second-largest hydrocarbon supplier to the United States after Canada. Shh.
This has all popped in the last three or four years with closure of refineries around Philadelphia and closure of refineries in the Caribbean, and the Venezuelan thing. So, anyways, I went to see what might work, what did people want, and what was available that we might bring out. I mean, we knew something about some of the—it’s a navy town, like what are we going to…?
But we also knew that there was some good science there. The only way to find out what we might do is go. Talk is so cheap. So, I got on a plane and went. And ultimately, got a relationship, fell in love with my interpreter, you know. It was not an instant thing. It took a while. There’s a long story behind that.
But very quickly it became clear that the OCFES, that there wasn’t anything that we could do—we ended up shipping some used cars, police cars, actually, out of Seattle-Tacoma to Vladivostok. But their focus was New Zealand and Australia, Singapore, a little bit of Vietnam. But we just couldn’t find anything to make it work. The Apple guys in the Pacific Northwest tried to—they made a go of it. But price, just couldn’t get U.S. prices competitive, along with the logistics. It just didn’t pencil out. Ultimately, most of the cargo I brought in came out of Western Europe.