Bloomberg Warns of Russia’s Business Minefields

Bloomberg’s Matthew Lynn warns of the perils of investing in Russia:

How much provocation does big business need before it has doubts about Russia?

Anglo-Dutch oil company Royal Dutch Shell Plc has been threatened with lawsuits from the Russian government, which is tightening its grip on the country’s energy industry.

Companies as diverse as Swedish furniture chain Ikea AB and German retailer Metro AG are also finding that Russia can be a tough place to do business.

Yet Western companies are still pouring money, energy and expertise into Russia. They are attracted by a high-growth, low- tax economy offering the chance to make a lot of money quickly.

It is time they wised up. Sure, you can make a quick buck in Russia. The trouble is that you can lose it just as fast if the government bullies you out of what you have created. Until Russia starts playing by the rules as part of the global economy, foreign investment should be shifted elsewhere.

“Investors need to start holding executives to account for giving in to this kind of extortion,” Robert Amsterdam, a lawyer for Russian oil tycoon Mikhail Khodorkovsky, said in a telephone interview. Khodorkovsky, who says he was targeted for supporting opponents of the Russian government, is serving an eight-year prison term for fraud and tax evasion.

The treatment of Shell is the most shameful episode so far. Shell’s development of the $22 billion Sakhalin-2 oil and gas field off Russia’s Pacific coastline is one of the biggest foreign investments made in the country since the collapse of the communist regime 15 years ago.

Gazprom Move

Sakhalin-2 is the only major oil and gas field in Russia that is wholly foreign-owned, so it was only a matter of time before Russian President Vladimir Putin decided to bring it under state control. The government plans to lodge a claim of at least $10 billion in environmental damages against Shell. State- owned energy company OAO Gazprom is now conveniently positioning itself to buy half of the project.

Shell has brought its offshore-drilling techniques to the Sakhalin-2 field. It has invested a huge amount of capital. Now, it looks as if the company will be harassed until it agrees to sell a big chunk of its assets to Gazprom, no doubt at a knock- down price. This way of doing business might be normal in some countries. Yet it has no place among major companies from developed nations.

It is an outrageous maneuver by Putin and the Russian government. One wonders why U.K. Prime Minister Tony Blair has flown off to make another doomed attempt at bringing peace to the Middle East when he could be deploying his self-proclaimed diplomatic genius to help one of his country’s biggest companies.

Economic Chauvinism

Although the saga has some way to run, there is little doubt how it will end. Shell will have to surrender. After all, what else can it do? You can’t operate in a nation whose government is set against you.

Russia’s treatment of Shell should serve as a warning. The country may soon become a no-go area for global companies. It is developing a narrow-minded economic chauvinism that even the French would find embarrassing. The best response from big business would be to stay away.

The oil and gas industry isn’t the only target. Ikea has been embroiled in numerous disputes with Russian authorities since it started opening its familiar blue and yellow sheds in the country in March 2000. The company was once stopped from building a footbridge across a busy highway to its store because the walkway was too close to a war monument. Ikea’s founder, Ingvar Kamprad, unsuccessfully sought a meeting with Putin last year to complain about how Ikea was being treated.

Metro Price War

Likewise, Metro, Germany’s largest retailer, is facing criticism from Russian electronics chains for undercutting the prices of local retailers at the Media Markt outlets it has opened in Moscow.

Maybe you can argue that the country needs control of its oil and gas reserves. But Ikea? What possible harm could cheap self-assembly bookshelves be doing to Russian pride?

The mystery is that foreign companies are still lining up to get their faces punched. Italian fashion company Stefanel SpA said last month it plans to open about 30 stores in Russia over the next three or four years, according to La Stampa newspaper.

Pernod Ricard SA, the world’s second-largest liquor producer, said this month it may buy Russia’s Stolichnaya vodka brand. How is that possible? If Shell isn’t allowed to own Russia’s second-most-important form of liquid energy, Putin’s government surely won’t be happy with the French grabbing the most important one.

Rapid growth may have convinced many big companies that they need to be in the Russian market. Yet if you aren’t allowed to keep control of your assets, there is no point in being there. Put your money to work in eastern Europe, India or China instead.

If Western capital and know-how were withdrawn, Putin and his cronies may even understand that they must start playing by the rules.

Cicero continues the theme:

The implications of his point that Russia is not a sensible place for major international investment are even more profound than they first appear.

Essentially Russia is not only refusing to allow international business to function, but where investment is being made in capital equipment and techniques that the Russians do not posses themselves, then they are trying to steal this proprietary technology.

Meanwhile the political picture grows more violent. Putin’s “Nashi” goons continue to harass anyone they see fit- including the widespread use of violence and murder.

This is not a recipe for a powerful Russia. It is a recipe for an impoverished, weak and isolated Russia. Such is the catastophe that the KGB Colonel has led his country into.

The greedy, Mafia state will fail- and with unforeseeable consequences. Despite the flow of petro-dollars, the money leaves Russia as fast as it arrives. Away from the Potemkin villages of Moscow and St. Petersburg, conditions are little better than mediaeval. Corrupt and broken police forces vie with the local hoodlums to see who can extract more from the defeated and downtrodden populace. The corrupt and brutal army continues to bully thousands of conscripts- hundreds of whom die each year. Meanwhile generals make a niced cut selling arms, often to the Mafia or to the Chechen troops that they are supposed to be fighting.

The average Russian male can now expect to live less than 52 years. Most even of that short time is likely to be in a drunken haze of gutrot vodka.

By taking away peoples rights to control their own lives, you take away their reason to live. The criminal regime of the vile Putin- now apparently the richest man in his tin-pot kingdom- has destroyed more than it created, but mostly it has destroyed the most precious thing of all: hope.

Thanks for reading La Russophobe !

Bloomberg Warns of Russia’s Business Minefields

Bloomberg’s Matthew Lynn warns of the perils of investing in Russia:

How much provocation does big business need before it has doubts about Russia?

Anglo-Dutch oil company Royal Dutch Shell Plc has been threatened with lawsuits from the Russian government, which is tightening its grip on the country’s energy industry.

Companies as diverse as Swedish furniture chain Ikea AB and German retailer Metro AG are also finding that Russia can be a tough place to do business.

Yet Western companies are still pouring money, energy and expertise into Russia. They are attracted by a high-growth, low- tax economy offering the chance to make a lot of money quickly.

It is time they wised up. Sure, you can make a quick buck in Russia. The trouble is that you can lose it just as fast if the government bullies you out of what you have created. Until Russia starts playing by the rules as part of the global economy, foreign investment should be shifted elsewhere.

“Investors need to start holding executives to account for giving in to this kind of extortion,” Robert Amsterdam, a lawyer for Russian oil tycoon Mikhail Khodorkovsky, said in a telephone interview. Khodorkovsky, who says he was targeted for supporting opponents of the Russian government, is serving an eight-year prison term for fraud and tax evasion.

The treatment of Shell is the most shameful episode so far. Shell’s development of the $22 billion Sakhalin-2 oil and gas field off Russia’s Pacific coastline is one of the biggest foreign investments made in the country since the collapse of the communist regime 15 years ago.

Gazprom Move

Sakhalin-2 is the only major oil and gas field in Russia that is wholly foreign-owned, so it was only a matter of time before Russian President Vladimir Putin decided to bring it under state control. The government plans to lodge a claim of at least $10 billion in environmental damages against Shell. State- owned energy company OAO Gazprom is now conveniently positioning itself to buy half of the project.

Shell has brought its offshore-drilling techniques to the Sakhalin-2 field. It has invested a huge amount of capital. Now, it looks as if the company will be harassed until it agrees to sell a big chunk of its assets to Gazprom, no doubt at a knock- down price. This way of doing business might be normal in some countries. Yet it has no place among major companies from developed nations.

It is an outrageous maneuver by Putin and the Russian government. One wonders why U.K. Prime Minister Tony Blair has flown off to make another doomed attempt at bringing peace to the Middle East when he could be deploying his self-proclaimed diplomatic genius to help one of his country’s biggest companies.

Economic Chauvinism

Although the saga has some way to run, there is little doubt how it will end. Shell will have to surrender. After all, what else can it do? You can’t operate in a nation whose government is set against you.

Russia’s treatment of Shell should serve as a warning. The country may soon become a no-go area for global companies. It is developing a narrow-minded economic chauvinism that even the French would find embarrassing. The best response from big business would be to stay away.

The oil and gas industry isn’t the only target. Ikea has been embroiled in numerous disputes with Russian authorities since it started opening its familiar blue and yellow sheds in the country in March 2000. The company was once stopped from building a footbridge across a busy highway to its store because the walkway was too close to a war monument. Ikea’s founder, Ingvar Kamprad, unsuccessfully sought a meeting with Putin last year to complain about how Ikea was being treated.

Metro Price War

Likewise, Metro, Germany’s largest retailer, is facing criticism from Russian electronics chains for undercutting the prices of local retailers at the Media Markt outlets it has opened in Moscow.

Maybe you can argue that the country needs control of its oil and gas reserves. But Ikea? What possible harm could cheap self-assembly bookshelves be doing to Russian pride?

The mystery is that foreign companies are still lining up to get their faces punched. Italian fashion company Stefanel SpA said last month it plans to open about 30 stores in Russia over the next three or four years, according to La Stampa newspaper.

Pernod Ricard SA, the world’s second-largest liquor producer, said this month it may buy Russia’s Stolichnaya vodka brand. How is that possible? If Shell isn’t allowed to own Russia’s second-most-important form of liquid energy, Putin’s government surely won’t be happy with the French grabbing the most important one.

Rapid growth may have convinced many big companies that they need to be in the Russian market. Yet if you aren’t allowed to keep control of your assets, there is no point in being there. Put your money to work in eastern Europe, India or China instead.

If Western capital and know-how were withdrawn, Putin and his cronies may even understand that they must start playing by the rules.

Cicero continues the theme:

The implications of his point that Russia is not a sensible place for major international investment are even more profound than they first appear.

Essentially Russia is not only refusing to allow international business to function, but where investment is being made in capital equipment and techniques that the Russians do not posses themselves, then they are trying to steal this proprietary technology.

Meanwhile the political picture grows more violent. Putin’s “Nashi” goons continue to harass anyone they see fit- including the widespread use of violence and murder.

This is not a recipe for a powerful Russia. It is a recipe for an impoverished, weak and isolated Russia. Such is the catastophe that the KGB Colonel has led his country into.

The greedy, Mafia state will fail- and with unforeseeable consequences. Despite the flow of petro-dollars, the money leaves Russia as fast as it arrives. Away from the Potemkin villages of Moscow and St. Petersburg, conditions are little better than mediaeval. Corrupt and broken police forces vie with the local hoodlums to see who can extract more from the defeated and downtrodden populace. The corrupt and brutal army continues to bully thousands of conscripts- hundreds of whom die each year. Meanwhile generals make a niced cut selling arms, often to the Mafia or to the Chechen troops that they are supposed to be fighting.

The average Russian male can now expect to live less than 52 years. Most even of that short time is likely to be in a drunken haze of gutrot vodka.

By taking away peoples rights to control their own lives, you take away their reason to live. The criminal regime of the vile Putin- now apparently the richest man in his tin-pot kingdom- has destroyed more than it created, but mostly it has destroyed the most precious thing of all: hope.

Thanks for reading La Russophobe !

Bloomberg Warns of Russia’s Business Minefields

Bloomberg’s Matthew Lynn warns of the perils of investing in Russia:

How much provocation does big business need before it has doubts about Russia?

Anglo-Dutch oil company Royal Dutch Shell Plc has been threatened with lawsuits from the Russian government, which is tightening its grip on the country’s energy industry.

Companies as diverse as Swedish furniture chain Ikea AB and German retailer Metro AG are also finding that Russia can be a tough place to do business.

Yet Western companies are still pouring money, energy and expertise into Russia. They are attracted by a high-growth, low- tax economy offering the chance to make a lot of money quickly.

It is time they wised up. Sure, you can make a quick buck in Russia. The trouble is that you can lose it just as fast if the government bullies you out of what you have created. Until Russia starts playing by the rules as part of the global economy, foreign investment should be shifted elsewhere.

“Investors need to start holding executives to account for giving in to this kind of extortion,” Robert Amsterdam, a lawyer for Russian oil tycoon Mikhail Khodorkovsky, said in a telephone interview. Khodorkovsky, who says he was targeted for supporting opponents of the Russian government, is serving an eight-year prison term for fraud and tax evasion.

The treatment of Shell is the most shameful episode so far. Shell’s development of the $22 billion Sakhalin-2 oil and gas field off Russia’s Pacific coastline is one of the biggest foreign investments made in the country since the collapse of the communist regime 15 years ago.

Gazprom Move

Sakhalin-2 is the only major oil and gas field in Russia that is wholly foreign-owned, so it was only a matter of time before Russian President Vladimir Putin decided to bring it under state control. The government plans to lodge a claim of at least $10 billion in environmental damages against Shell. State- owned energy company OAO Gazprom is now conveniently positioning itself to buy half of the project.

Shell has brought its offshore-drilling techniques to the Sakhalin-2 field. It has invested a huge amount of capital. Now, it looks as if the company will be harassed until it agrees to sell a big chunk of its assets to Gazprom, no doubt at a knock- down price. This way of doing business might be normal in some countries. Yet it has no place among major companies from developed nations.

It is an outrageous maneuver by Putin and the Russian government. One wonders why U.K. Prime Minister Tony Blair has flown off to make another doomed attempt at bringing peace to the Middle East when he could be deploying his self-proclaimed diplomatic genius to help one of his country’s biggest companies.

Economic Chauvinism

Although the saga has some way to run, there is little doubt how it will end. Shell will have to surrender. After all, what else can it do? You can’t operate in a nation whose government is set against you.

Russia’s treatment of Shell should serve as a warning. The country may soon become a no-go area for global companies. It is developing a narrow-minded economic chauvinism that even the French would find embarrassing. The best response from big business would be to stay away.

The oil and gas industry isn’t the only target. Ikea has been embroiled in numerous disputes with Russian authorities since it started opening its familiar blue and yellow sheds in the country in March 2000. The company was once stopped from building a footbridge across a busy highway to its store because the walkway was too close to a war monument. Ikea’s founder, Ingvar Kamprad, unsuccessfully sought a meeting with Putin last year to complain about how Ikea was being treated.

Metro Price War

Likewise, Metro, Germany’s largest retailer, is facing criticism from Russian electronics chains for undercutting the prices of local retailers at the Media Markt outlets it has opened in Moscow.

Maybe you can argue that the country needs control of its oil and gas reserves. But Ikea? What possible harm could cheap self-assembly bookshelves be doing to Russian pride?

The mystery is that foreign companies are still lining up to get their faces punched. Italian fashion company Stefanel SpA said last month it plans to open about 30 stores in Russia over the next three or four years, according to La Stampa newspaper.

Pernod Ricard SA, the world’s second-largest liquor producer, said this month it may buy Russia’s Stolichnaya vodka brand. How is that possible? If Shell isn’t allowed to own Russia’s second-most-important form of liquid energy, Putin’s government surely won’t be happy with the French grabbing the most important one.

Rapid growth may have convinced many big companies that they need to be in the Russian market. Yet if you aren’t allowed to keep control of your assets, there is no point in being there. Put your money to work in eastern Europe, India or China instead.

If Western capital and know-how were withdrawn, Putin and his cronies may even understand that they must start playing by the rules.

Cicero continues the theme:

The implications of his point that Russia is not a sensible place for major international investment are even more profound than they first appear.

Essentially Russia is not only refusing to allow international business to function, but where investment is being made in capital equipment and techniques that the Russians do not posses themselves, then they are trying to steal this proprietary technology.

Meanwhile the political picture grows more violent. Putin’s “Nashi” goons continue to harass anyone they see fit- including the widespread use of violence and murder.

This is not a recipe for a powerful Russia. It is a recipe for an impoverished, weak and isolated Russia. Such is the catastophe that the KGB Colonel has led his country into.

The greedy, Mafia state will fail- and with unforeseeable consequences. Despite the flow of petro-dollars, the money leaves Russia as fast as it arrives. Away from the Potemkin villages of Moscow and St. Petersburg, conditions are little better than mediaeval. Corrupt and broken police forces vie with the local hoodlums to see who can extract more from the defeated and downtrodden populace. The corrupt and brutal army continues to bully thousands of conscripts- hundreds of whom die each year. Meanwhile generals make a niced cut selling arms, often to the Mafia or to the Chechen troops that they are supposed to be fighting.

The average Russian male can now expect to live less than 52 years. Most even of that short time is likely to be in a drunken haze of gutrot vodka.

By taking away peoples rights to control their own lives, you take away their reason to live. The criminal regime of the vile Putin- now apparently the richest man in his tin-pot kingdom- has destroyed more than it created, but mostly it has destroyed the most precious thing of all: hope.

Thanks for reading La Russophobe !

Bloomberg Warns of Russia’s Business Minefields

Bloomberg’s Matthew Lynn warns of the perils of investing in Russia:

How much provocation does big business need before it has doubts about Russia?

Anglo-Dutch oil company Royal Dutch Shell Plc has been threatened with lawsuits from the Russian government, which is tightening its grip on the country’s energy industry.

Companies as diverse as Swedish furniture chain Ikea AB and German retailer Metro AG are also finding that Russia can be a tough place to do business.

Yet Western companies are still pouring money, energy and expertise into Russia. They are attracted by a high-growth, low- tax economy offering the chance to make a lot of money quickly.

It is time they wised up. Sure, you can make a quick buck in Russia. The trouble is that you can lose it just as fast if the government bullies you out of what you have created. Until Russia starts playing by the rules as part of the global economy, foreign investment should be shifted elsewhere.

“Investors need to start holding executives to account for giving in to this kind of extortion,” Robert Amsterdam, a lawyer for Russian oil tycoon Mikhail Khodorkovsky, said in a telephone interview. Khodorkovsky, who says he was targeted for supporting opponents of the Russian government, is serving an eight-year prison term for fraud and tax evasion.

The treatment of Shell is the most shameful episode so far. Shell’s development of the $22 billion Sakhalin-2 oil and gas field off Russia’s Pacific coastline is one of the biggest foreign investments made in the country since the collapse of the communist regime 15 years ago.

Gazprom Move

Sakhalin-2 is the only major oil and gas field in Russia that is wholly foreign-owned, so it was only a matter of time before Russian President Vladimir Putin decided to bring it under state control. The government plans to lodge a claim of at least $10 billion in environmental damages against Shell. State- owned energy company OAO Gazprom is now conveniently positioning itself to buy half of the project.

Shell has brought its offshore-drilling techniques to the Sakhalin-2 field. It has invested a huge amount of capital. Now, it looks as if the company will be harassed until it agrees to sell a big chunk of its assets to Gazprom, no doubt at a knock- down price. This way of doing business might be normal in some countries. Yet it has no place among major companies from developed nations.

It is an outrageous maneuver by Putin and the Russian government. One wonders why U.K. Prime Minister Tony Blair has flown off to make another doomed attempt at bringing peace to the Middle East when he could be deploying his self-proclaimed diplomatic genius to help one of his country’s biggest companies.

Economic Chauvinism

Although the saga has some way to run, there is little doubt how it will end. Shell will have to surrender. After all, what else can it do? You can’t operate in a nation whose government is set against you.

Russia’s treatment of Shell should serve as a warning. The country may soon become a no-go area for global companies. It is developing a narrow-minded economic chauvinism that even the French would find embarrassing. The best response from big business would be to stay away.

The oil and gas industry isn’t the only target. Ikea has been embroiled in numerous disputes with Russian authorities since it started opening its familiar blue and yellow sheds in the country in March 2000. The company was once stopped from building a footbridge across a busy highway to its store because the walkway was too close to a war monument. Ikea’s founder, Ingvar Kamprad, unsuccessfully sought a meeting with Putin last year to complain about how Ikea was being treated.

Metro Price War

Likewise, Metro, Germany’s largest retailer, is facing criticism from Russian electronics chains for undercutting the prices of local retailers at the Media Markt outlets it has opened in Moscow.

Maybe you can argue that the country needs control of its oil and gas reserves. But Ikea? What possible harm could cheap self-assembly bookshelves be doing to Russian pride?

The mystery is that foreign companies are still lining up to get their faces punched. Italian fashion company Stefanel SpA said last month it plans to open about 30 stores in Russia over the next three or four years, according to La Stampa newspaper.

Pernod Ricard SA, the world’s second-largest liquor producer, said this month it may buy Russia’s Stolichnaya vodka brand. How is that possible? If Shell isn’t allowed to own Russia’s second-most-important form of liquid energy, Putin’s government surely won’t be happy with the French grabbing the most important one.

Rapid growth may have convinced many big companies that they need to be in the Russian market. Yet if you aren’t allowed to keep control of your assets, there is no point in being there. Put your money to work in eastern Europe, India or China instead.

If Western capital and know-how were withdrawn, Putin and his cronies may even understand that they must start playing by the rules.

Cicero continues the theme:

The implications of his point that Russia is not a sensible place for major international investment are even more profound than they first appear.

Essentially Russia is not only refusing to allow international business to function, but where investment is being made in capital equipment and techniques that the Russians do not posses themselves, then they are trying to steal this proprietary technology.

Meanwhile the political picture grows more violent. Putin’s “Nashi” goons continue to harass anyone they see fit- including the widespread use of violence and murder.

This is not a recipe for a powerful Russia. It is a recipe for an impoverished, weak and isolated Russia. Such is the catastophe that the KGB Colonel has led his country into.

The greedy, Mafia state will fail- and with unforeseeable consequences. Despite the flow of petro-dollars, the money leaves Russia as fast as it arrives. Away from the Potemkin villages of Moscow and St. Petersburg, conditions are little better than mediaeval. Corrupt and broken police forces vie with the local hoodlums to see who can extract more from the defeated and downtrodden populace. The corrupt and brutal army continues to bully thousands of conscripts- hundreds of whom die each year. Meanwhile generals make a niced cut selling arms, often to the Mafia or to the Chechen troops that they are supposed to be fighting.

The average Russian male can now expect to live less than 52 years. Most even of that short time is likely to be in a drunken haze of gutrot vodka.

By taking away peoples rights to control their own lives, you take away their reason to live. The criminal regime of the vile Putin- now apparently the richest man in his tin-pot kingdom- has destroyed more than it created, but mostly it has destroyed the most precious thing of all: hope.

Thanks for reading La Russophobe !

Bloomberg Warns of Russia’s Business Minefields

Bloomberg’s Matthew Lynn warns of the perils of investing in Russia:

How much provocation does big business need before it has doubts about Russia?

Anglo-Dutch oil company Royal Dutch Shell Plc has been threatened with lawsuits from the Russian government, which is tightening its grip on the country’s energy industry.

Companies as diverse as Swedish furniture chain Ikea AB and German retailer Metro AG are also finding that Russia can be a tough place to do business.

Yet Western companies are still pouring money, energy and expertise into Russia. They are attracted by a high-growth, low- tax economy offering the chance to make a lot of money quickly.

It is time they wised up. Sure, you can make a quick buck in Russia. The trouble is that you can lose it just as fast if the government bullies you out of what you have created. Until Russia starts playing by the rules as part of the global economy, foreign investment should be shifted elsewhere.

“Investors need to start holding executives to account for giving in to this kind of extortion,” Robert Amsterdam, a lawyer for Russian oil tycoon Mikhail Khodorkovsky, said in a telephone interview. Khodorkovsky, who says he was targeted for supporting opponents of the Russian government, is serving an eight-year prison term for fraud and tax evasion.

The treatment of Shell is the most shameful episode so far. Shell’s development of the $22 billion Sakhalin-2 oil and gas field off Russia’s Pacific coastline is one of the biggest foreign investments made in the country since the collapse of the communist regime 15 years ago.

Gazprom Move

Sakhalin-2 is the only major oil and gas field in Russia that is wholly foreign-owned, so it was only a matter of time before Russian President Vladimir Putin decided to bring it under state control. The government plans to lodge a claim of at least $10 billion in environmental damages against Shell. State- owned energy company OAO Gazprom is now conveniently positioning itself to buy half of the project.

Shell has brought its offshore-drilling techniques to the Sakhalin-2 field. It has invested a huge amount of capital. Now, it looks as if the company will be harassed until it agrees to sell a big chunk of its assets to Gazprom, no doubt at a knock- down price. This way of doing business might be normal in some countries. Yet it has no place among major companies from developed nations.

It is an outrageous maneuver by Putin and the Russian government. One wonders why U.K. Prime Minister Tony Blair has flown off to make another doomed attempt at bringing peace to the Middle East when he could be deploying his self-proclaimed diplomatic genius to help one of his country’s biggest companies.

Economic Chauvinism

Although the saga has some way to run, there is little doubt how it will end. Shell will have to surrender. After all, what else can it do? You can’t operate in a nation whose government is set against you.

Russia’s treatment of Shell should serve as a warning. The country may soon become a no-go area for global companies. It is developing a narrow-minded economic chauvinism that even the French would find embarrassing. The best response from big business would be to stay away.

The oil and gas industry isn’t the only target. Ikea has been embroiled in numerous disputes with Russian authorities since it started opening its familiar blue and yellow sheds in the country in March 2000. The company was once stopped from building a footbridge across a busy highway to its store because the walkway was too close to a war monument. Ikea’s founder, Ingvar Kamprad, unsuccessfully sought a meeting with Putin last year to complain about how Ikea was being treated.

Metro Price War

Likewise, Metro, Germany’s largest retailer, is facing criticism from Russian electronics chains for undercutting the prices of local retailers at the Media Markt outlets it has opened in Moscow.

Maybe you can argue that the country needs control of its oil and gas reserves. But Ikea? What possible harm could cheap self-assembly bookshelves be doing to Russian pride?

The mystery is that foreign companies are still lining up to get their faces punched. Italian fashion company Stefanel SpA said last month it plans to open about 30 stores in Russia over the next three or four years, according to La Stampa newspaper.

Pernod Ricard SA, the world’s second-largest liquor producer, said this month it may buy Russia’s Stolichnaya vodka brand. How is that possible? If Shell isn’t allowed to own Russia’s second-most-important form of liquid energy, Putin’s government surely won’t be happy with the French grabbing the most important one.

Rapid growth may have convinced many big companies that they need to be in the Russian market. Yet if you aren’t allowed to keep control of your assets, there is no point in being there. Put your money to work in eastern Europe, India or China instead.

If Western capital and know-how were withdrawn, Putin and his cronies may even understand that they must start playing by the rules.

Cicero continues the theme:

The implications of his point that Russia is not a sensible place for major international investment are even more profound than they first appear.

Essentially Russia is not only refusing to allow international business to function, but where investment is being made in capital equipment and techniques that the Russians do not posses themselves, then they are trying to steal this proprietary technology.

Meanwhile the political picture grows more violent. Putin’s “Nashi” goons continue to harass anyone they see fit- including the widespread use of violence and murder.

This is not a recipe for a powerful Russia. It is a recipe for an impoverished, weak and isolated Russia. Such is the catastophe that the KGB Colonel has led his country into.

The greedy, Mafia state will fail- and with unforeseeable consequences. Despite the flow of petro-dollars, the money leaves Russia as fast as it arrives. Away from the Potemkin villages of Moscow and St. Petersburg, conditions are little better than mediaeval. Corrupt and broken police forces vie with the local hoodlums to see who can extract more from the defeated and downtrodden populace. The corrupt and brutal army continues to bully thousands of conscripts- hundreds of whom die each year. Meanwhile generals make a niced cut selling arms, often to the Mafia or to the Chechen troops that they are supposed to be fighting.

The average Russian male can now expect to live less than 52 years. Most even of that short time is likely to be in a drunken haze of gutrot vodka.

By taking away peoples rights to control their own lives, you take away their reason to live. The criminal regime of the vile Putin- now apparently the richest man in his tin-pot kingdom- has destroyed more than it created, but mostly it has destroyed the most precious thing of all: hope.

Thanks for reading La Russophobe !

Annals of Russian Hypocrisy: S.N.A.F.U.

ZheZhe offers a translation from the Russian publication Literaturnaya Gazeta which is a classic example of Russian analysis. In other words, it’s a complete mess, with every clever insight balanced by a statement that is not only completely insane but utterly self-destructive.

The author’s theme is the unfairly stereotypical image of Russia to be found in the minds of Westerners. He calls for a “completely different Russia.” So guess how he fairly, accurately characterizes the West:

The point here is that public opinion in the West, especially in the United States, is dominated by the cult of ethnic, sexual, and other minorities, along with minority peoples and small countries.

Breathtaking, isn’t it? He then turns right around and argues against a third term for Vladimir Putin, stating: “Besides, international experience shows that remaining in power for a long time isn’t good for the leader himself or the society he leads. Firstly, two terms are enough for a president to do what he can. Secondly, power is a great temptation; would it really be wise to set a precedent?” International experience? You mean in the WEST? The place “dominated by the cult of ethnic, sexual and other minorities”? Uh . . . yeah.

The guy then actually goes on to make a three good points. (1) He admits that Russia isn’t an “energy superpower” because it only exports raw materials. (2) He admits: “If Russia has some of the world’s highest levels of corruption and organized crime influence, we can hardly expect to gain the respect of the civilized world.” (3) He even admits that “in the process of fighting the anarchy of the 1990s, an imbalance has indeed been created: too many powers given to the federal government and the executive branch, the bureaucracy becoming even more powerful, and a drastic reduction of pluralism in the media, especially the electronic media.”

But then the bottom falls out, and we’re right back to square one again. When he asks what should be done about societal corruption in Russia, he answers: “the state needs to take resolute action against crime and corruption,” thus directly undercutting the third point he’d just made about the excessive power of the state.

Thanks for reading La Russophobe !

Russia’s Doomed Children

Journal Chretian reports on the crucial role played by foreign NGOs in Russia, currently under assault by the crazed Kremlin, and on the merciless plight of Russia’s children:

KHABOROVSK, RUSSIA (ANS) — “Imagine the future of a country in which 1 out of every 21 of the inhabitants is currently a child who is an orphan. This is the situation in Russia, where recent Russian media have reported the estimated orphan population at 2 million and the street children at 4 million.” (Archives of Pediatrics & Adolescent Medicines, Vol 160, No.5 May 2006)

Five year old Dasha (pictured, left) was found living with her alcoholic parents in Khaborovsk, Far-East Russia taking on a parenting role, cooking and cleaning, as her parents were deeply addicted to alcohol. Her parents sold the family home to move to a desperately run down house. On moving, the family discovered their new home was already occupied by people who beat them and left them on the streets, homeless and penniless.

Instead of being left on the streets, the Samuel Children’s Centre (a centre for children and young people living on the streets or in difficult home situations) supported Dasha and helped her to be accepted into a local shelter for homeless children. Her parents were unable to find a way to escape their terrible addiction and remained on the streets. Her mother died from TB complicated by alcoholism. Young Dasha took up residence in the shelter. With the help of the Centre, Dasha built friendships, completed an education and has been able to attend church.

The Samuel Children’s Centre is one of 10 projects supported by ChildAid to Russia and the Republics. ChildAid is a charity based in United Kingdom. It seeks to transform lives of children in poverty who resort to the street, and support for families who are either forced to “abandon” their children or live in such poverty and despair driven by alcohol and drugs – exposing children to abuse and being sold for prostitution and trafficking. The work is through collaboration with established local Christian partners in Russia, Ukraine, Moldova and Belarus who seek to improve the quality of life for street children, orphans and children with disabilities, through short and long term aid and development.

It is incredibly difficult to get any concrete statistics on the numbers of children living on the streets or in institutional care in these regions. This is principally down to definition of what actually is a “street child”. If the definition is one where the child has no home, family, institution or the like that they could refer to as their “home” – then they are a “true” street child. In reality there are probably relatively few of these.

If, however, the definition extends to include those who may have a home and relation(s) who could be defined as being responsible for them, but, due to the conditions that they have to endure in terms of poverty and abuse they do not attend school, have little clothes and food and spend their days on the streets – then the reality of Russian street children becomes more complete.

For children with disabilities the position is even worse. They are one of the most marginalized and deprived groups in the former Soviet Union. For generations, they were regarded as ‘mistakes’ and locked up in institutions. This legacy remains and it is still common for children with disabilities to be put into orphanages where they receive little or no stimulation or love.

Thanks for reading La Russophobe !

Russia’s Doomed Children

Journal Chretian reports on the crucial role played by foreign NGOs in Russia, currently under assault by the crazed Kremlin, and on the merciless plight of Russia’s children:

KHABOROVSK, RUSSIA (ANS) — “Imagine the future of a country in which 1 out of every 21 of the inhabitants is currently a child who is an orphan. This is the situation in Russia, where recent Russian media have reported the estimated orphan population at 2 million and the street children at 4 million.” (Archives of Pediatrics & Adolescent Medicines, Vol 160, No.5 May 2006)

Five year old Dasha (pictured, left) was found living with her alcoholic parents in Khaborovsk, Far-East Russia taking on a parenting role, cooking and cleaning, as her parents were deeply addicted to alcohol. Her parents sold the family home to move to a desperately run down house. On moving, the family discovered their new home was already occupied by people who beat them and left them on the streets, homeless and penniless.

Instead of being left on the streets, the Samuel Children’s Centre (a centre for children and young people living on the streets or in difficult home situations) supported Dasha and helped her to be accepted into a local shelter for homeless children. Her parents were unable to find a way to escape their terrible addiction and remained on the streets. Her mother died from TB complicated by alcoholism. Young Dasha took up residence in the shelter. With the help of the Centre, Dasha built friendships, completed an education and has been able to attend church.

The Samuel Children’s Centre is one of 10 projects supported by ChildAid to Russia and the Republics. ChildAid is a charity based in United Kingdom. It seeks to transform lives of children in poverty who resort to the street, and support for families who are either forced to “abandon” their children or live in such poverty and despair driven by alcohol and drugs – exposing children to abuse and being sold for prostitution and trafficking. The work is through collaboration with established local Christian partners in Russia, Ukraine, Moldova and Belarus who seek to improve the quality of life for street children, orphans and children with disabilities, through short and long term aid and development.

It is incredibly difficult to get any concrete statistics on the numbers of children living on the streets or in institutional care in these regions. This is principally down to definition of what actually is a “street child”. If the definition is one where the child has no home, family, institution or the like that they could refer to as their “home” – then they are a “true” street child. In reality there are probably relatively few of these.

If, however, the definition extends to include those who may have a home and relation(s) who could be defined as being responsible for them, but, due to the conditions that they have to endure in terms of poverty and abuse they do not attend school, have little clothes and food and spend their days on the streets – then the reality of Russian street children becomes more complete.

For children with disabilities the position is even worse. They are one of the most marginalized and deprived groups in the former Soviet Union. For generations, they were regarded as ‘mistakes’ and locked up in institutions. This legacy remains and it is still common for children with disabilities to be put into orphanages where they receive little or no stimulation or love.

Thanks for reading La Russophobe !

Russia’s Doomed Children

Journal Chretian reports on the crucial role played by foreign NGOs in Russia, currently under assault by the crazed Kremlin, and on the merciless plight of Russia’s children:

KHABOROVSK, RUSSIA (ANS) — “Imagine the future of a country in which 1 out of every 21 of the inhabitants is currently a child who is an orphan. This is the situation in Russia, where recent Russian media have reported the estimated orphan population at 2 million and the street children at 4 million.” (Archives of Pediatrics & Adolescent Medicines, Vol 160, No.5 May 2006)

Five year old Dasha (pictured, left) was found living with her alcoholic parents in Khaborovsk, Far-East Russia taking on a parenting role, cooking and cleaning, as her parents were deeply addicted to alcohol. Her parents sold the family home to move to a desperately run down house. On moving, the family discovered their new home was already occupied by people who beat them and left them on the streets, homeless and penniless.

Instead of being left on the streets, the Samuel Children’s Centre (a centre for children and young people living on the streets or in difficult home situations) supported Dasha and helped her to be accepted into a local shelter for homeless children. Her parents were unable to find a way to escape their terrible addiction and remained on the streets. Her mother died from TB complicated by alcoholism. Young Dasha took up residence in the shelter. With the help of the Centre, Dasha built friendships, completed an education and has been able to attend church.

The Samuel Children’s Centre is one of 10 projects supported by ChildAid to Russia and the Republics. ChildAid is a charity based in United Kingdom. It seeks to transform lives of children in poverty who resort to the street, and support for families who are either forced to “abandon” their children or live in such poverty and despair driven by alcohol and drugs – exposing children to abuse and being sold for prostitution and trafficking. The work is through collaboration with established local Christian partners in Russia, Ukraine, Moldova and Belarus who seek to improve the quality of life for street children, orphans and children with disabilities, through short and long term aid and development.

It is incredibly difficult to get any concrete statistics on the numbers of children living on the streets or in institutional care in these regions. This is principally down to definition of what actually is a “street child”. If the definition is one where the child has no home, family, institution or the like that they could refer to as their “home” – then they are a “true” street child. In reality there are probably relatively few of these.

If, however, the definition extends to include those who may have a home and relation(s) who could be defined as being responsible for them, but, due to the conditions that they have to endure in terms of poverty and abuse they do not attend school, have little clothes and food and spend their days on the streets – then the reality of Russian street children becomes more complete.

For children with disabilities the position is even worse. They are one of the most marginalized and deprived groups in the former Soviet Union. For generations, they were regarded as ‘mistakes’ and locked up in institutions. This legacy remains and it is still common for children with disabilities to be put into orphanages where they receive little or no stimulation or love.

Thanks for reading La Russophobe !

Russia’s Doomed Children

Journal Chretian reports on the crucial role played by foreign NGOs in Russia, currently under assault by the crazed Kremlin, and on the merciless plight of Russia’s children:

KHABOROVSK, RUSSIA (ANS) — “Imagine the future of a country in which 1 out of every 21 of the inhabitants is currently a child who is an orphan. This is the situation in Russia, where recent Russian media have reported the estimated orphan population at 2 million and the street children at 4 million.” (Archives of Pediatrics & Adolescent Medicines, Vol 160, No.5 May 2006)

Five year old Dasha (pictured, left) was found living with her alcoholic parents in Khaborovsk, Far-East Russia taking on a parenting role, cooking and cleaning, as her parents were deeply addicted to alcohol. Her parents sold the family home to move to a desperately run down house. On moving, the family discovered their new home was already occupied by people who beat them and left them on the streets, homeless and penniless.

Instead of being left on the streets, the Samuel Children’s Centre (a centre for children and young people living on the streets or in difficult home situations) supported Dasha and helped her to be accepted into a local shelter for homeless children. Her parents were unable to find a way to escape their terrible addiction and remained on the streets. Her mother died from TB complicated by alcoholism. Young Dasha took up residence in the shelter. With the help of the Centre, Dasha built friendships, completed an education and has been able to attend church.

The Samuel Children’s Centre is one of 10 projects supported by ChildAid to Russia and the Republics. ChildAid is a charity based in United Kingdom. It seeks to transform lives of children in poverty who resort to the street, and support for families who are either forced to “abandon” their children or live in such poverty and despair driven by alcohol and drugs – exposing children to abuse and being sold for prostitution and trafficking. The work is through collaboration with established local Christian partners in Russia, Ukraine, Moldova and Belarus who seek to improve the quality of life for street children, orphans and children with disabilities, through short and long term aid and development.

It is incredibly difficult to get any concrete statistics on the numbers of children living on the streets or in institutional care in these regions. This is principally down to definition of what actually is a “street child”. If the definition is one where the child has no home, family, institution or the like that they could refer to as their “home” – then they are a “true” street child. In reality there are probably relatively few of these.

If, however, the definition extends to include those who may have a home and relation(s) who could be defined as being responsible for them, but, due to the conditions that they have to endure in terms of poverty and abuse they do not attend school, have little clothes and food and spend their days on the streets – then the reality of Russian street children becomes more complete.

For children with disabilities the position is even worse. They are one of the most marginalized and deprived groups in the former Soviet Union. For generations, they were regarded as ‘mistakes’ and locked up in institutions. This legacy remains and it is still common for children with disabilities to be put into orphanages where they receive little or no stimulation or love.

Thanks for reading La Russophobe !

Russia’s Doomed Children

Journal Chretian reports on the crucial role played by foreign NGOs in Russia, currently under assault by the crazed Kremlin, and on the merciless plight of Russia’s children:

KHABOROVSK, RUSSIA (ANS) — “Imagine the future of a country in which 1 out of every 21 of the inhabitants is currently a child who is an orphan. This is the situation in Russia, where recent Russian media have reported the estimated orphan population at 2 million and the street children at 4 million.” (Archives of Pediatrics & Adolescent Medicines, Vol 160, No.5 May 2006)

Five year old Dasha (pictured, left) was found living with her alcoholic parents in Khaborovsk, Far-East Russia taking on a parenting role, cooking and cleaning, as her parents were deeply addicted to alcohol. Her parents sold the family home to move to a desperately run down house. On moving, the family discovered their new home was already occupied by people who beat them and left them on the streets, homeless and penniless.

Instead of being left on the streets, the Samuel Children’s Centre (a centre for children and young people living on the streets or in difficult home situations) supported Dasha and helped her to be accepted into a local shelter for homeless children. Her parents were unable to find a way to escape their terrible addiction and remained on the streets. Her mother died from TB complicated by alcoholism. Young Dasha took up residence in the shelter. With the help of the Centre, Dasha built friendships, completed an education and has been able to attend church.

The Samuel Children’s Centre is one of 10 projects supported by ChildAid to Russia and the Republics. ChildAid is a charity based in United Kingdom. It seeks to transform lives of children in poverty who resort to the street, and support for families who are either forced to “abandon” their children or live in such poverty and despair driven by alcohol and drugs – exposing children to abuse and being sold for prostitution and trafficking. The work is through collaboration with established local Christian partners in Russia, Ukraine, Moldova and Belarus who seek to improve the quality of life for street children, orphans and children with disabilities, through short and long term aid and development.

It is incredibly difficult to get any concrete statistics on the numbers of children living on the streets or in institutional care in these regions. This is principally down to definition of what actually is a “street child”. If the definition is one where the child has no home, family, institution or the like that they could refer to as their “home” – then they are a “true” street child. In reality there are probably relatively few of these.

If, however, the definition extends to include those who may have a home and relation(s) who could be defined as being responsible for them, but, due to the conditions that they have to endure in terms of poverty and abuse they do not attend school, have little clothes and food and spend their days on the streets – then the reality of Russian street children becomes more complete.

For children with disabilities the position is even worse. They are one of the most marginalized and deprived groups in the former Soviet Union. For generations, they were regarded as ‘mistakes’ and locked up in institutions. This legacy remains and it is still common for children with disabilities to be put into orphanages where they receive little or no stimulation or love.

Thanks for reading La Russophobe !

Midnight in the Neo-Soviet Garden of Good and Evil

Robert Amsterdam points to this first hand account of the pro-Putin and anti-Putin demonstrations that occurred in Moscow over the weekend. Putin’s Nashi thugs, relying on Kremlin financing and Russian cowardice, outdrew the democracy protesters by a margin of 35 to 1.

After reciting the horrors on display before his eyes, including the fact that Nashi pretends to be gathering to help the veterans of World War II but in fact does absolutely nothing for them, and is in reality “a very well-funded theatrical spectacle,” the author concludes with a bit of dreck that captures the basic essence of what has always been wrong with many people’s analysis of Russia:

I suppose you could say it’s a symbol of Putin’s Russia – thousands of Santa Clauses going around Moscow giving out gifts funded with petrodollars, and totally outnumbering any ragged opposition rally. That, I’m afraid, is the state of Russian politics, and while we may not like it, I can’t say the state of Russian youth plunges me into complete depression. These were young, likeable people who were interested in the West and who genuinely wanted to improve their country. Maybe when they are a bit older they will be less eager to be taken for a ride.

“Maybe?” Dare we ask the author what his “maybe” is based on other than rose-colored glasses and a pipe dream? The only evidence contained in the text that could possibly support this “maybe” is his observation that “the kids who take part are not politically sophisticated. They are not committed members of Nashi or supporters of Putin. ” In other words, they’re not actually evil.

But they are willing to participate in a “spectacle” that consumes vast quantities of resources that could change the lives of many, many impoverished Russians. The author observes: “I was struck above all by the sheer expense of the operation. The Kremlin has so many petrodollars, it can waste them on a big, stupid PR stunt like this, just to show up the previous day’s opposition rally.”

A student who “genuinely wants” to get good grades in school but who isn’t willing to study in order to get them is a student who fails and ruins his life (or, in Russia’s case, steals his disseration and becomes President of Russia, a country doomed to become “Zaire with permafrost”). As the old saying goes: “If wishes were horses then beggars would ride.” What difference does it make what “good intentions” the members of Nashi may have? Maybe many of the young folks in Hitler’s legions had the “genuine” desire to make Germany a better country and help it recover from the shock of World War I. But if these young people are not willing to think critically about what kind of government they have, if they are willing to take handouts from a proud KGB spy after the KGB brought the nation to its knees, then what good are they?

Simply put, there is no basis whatsoever for believing that “when they are a bit older they will be less eager to be taken for a ride.” In fact, the exact opposite is the case. Right now, they are the most civic-minded they will ever be, and as they become older they will only become more corrupt and (even) less aware of the value of democracy and the alternative paths Russia might seek. One might as well have hoped that the members of the old Komsomol would have guided Russia away from the totalitarian nightmare of Communism.

These children are part of the problem, not the solution. They’ll grow up to admire Vladimir Putin and vote for people just like him. They’ll think it’s perfectly normal for the country to have a KGB spy as its president, they’ll ignore the harm the KGB has done to their country, and they’ll teach their kids to think the same way, just like they were taught.

But the author is the real problem. Instead of being brave enough to confront the obvious significance of the youth cult, instead of being brave enough to challenge them with hard questions, he prefers to live in a comfortable world of dreams where everything will be just fine in the morning.

Thanks for reading La Russophobe !

It’s just skuttlebutt, but . . . the Russian economy may be even worse than we imagined

La Russophobe almost never reports information which really amounts to nothing more than unsourced gossip. But this one is just too interesting let slide by. The site IC-Russia, which basically concerns itself with tourism matters, reports (citing Russian language sources Izvestia and D-Pils):

While Russian financiers are proudly reporting about capital influx to the country, their foreign colleagues are calculating outflow of funds from Russia. It has been reported recently that Russians have placed $219.6bn on banks’ deposits abroad, which considerably exceeds deposits with domestic banks as well as the annual budget of the RF.

If so, who are the people placing a quarter of Russian GDP on outlandish accounts? Experts say, many accounts are opened by particular firms operating only to disguise the richest Russians. Funds are rapidly leaving the country: the amount of Russian capital in foreign banks, compared to the same rate last year, has grown by half. A little less than 50% of all funds “flew” to London, which is no wonder by the way, since the city has always been known as an untroubled place for capitals.

However, sums of money that Russians keep on deposits in European banks may get one shocked. $220bn! Which equals to 5.8 trillion rubles. The sum goes 0.8 trillion rubles beyond the revenue side of the Russian budget, or, e.g. it is equal to 24% of Russian GDP. Technically only a little share of funds kept in foreign banks belongs to private individuals: major sums are controlled by Russian firms. Here we should point out how Russian and European companies differ: a foreign company is traditionally controlled by hundreds or thousands of stockholders, whereas owners of a Russian one can be easily counted on fingers. So it turns out, that money held on bank accounts is of private origin but “wrapped legally”.

Not infrequently money of unknown origin comes abroad to be laundered. As for honestly earned capitals, they can often be found in foreign banks: their owners want to keep it safe on the threshold of upcoming elections in 2008.

There are several ways for funds to be brought out of the country. E.g. a businessman sells his company’s assets to foreigners inland, sometimes it’s just a share of the whole business, but it is enough for a company to be given an international status. The money, paid by foreign partners, stay in banks abroad. Another way to take funds to foreign banks is acquisition of assets abroad. There exist other variants, but in any case a business needs an account or a deposit in a foreign bank.

Both types of transactions are quickly getting popular. According to the project Merger.ru, within only 9 months Russian companies got hold of foreign firms to the amount of $4.2bn (data of the same period in 2005 – $2.3bn). Foreigners purchased Russian assets to the amount of $5.8bn ($6.7bn within the same period last year), which means that Russians buy business abroad in increasing frequency, whereas foreigners demonstrate an opposite tendency.

The executive manager of Mergers.ru Yuri Ignatshin sees two reasons for it. The first one – businessmen willing to escape political risk in view of presidential election, want to save their capitals. The second and the main reason implies that Russian companies have been maximally developed in Russia and now try to enter the international market. Especially acute the problem is in the fields of metallurgy industry and fuel and energy complex of Russia. All markets are shared, participants are known and can’t come to the agreement on sale or merger. The only way out is to approach international markets.

Thanks for reading La Russophobe !

It’s just skuttlebutt, but . . . the Russian economy may be even worse than we imagined

La Russophobe almost never reports information which really amounts to nothing more than unsourced gossip. But this one is just too interesting let slide by. The site IC-Russia, which basically concerns itself with tourism matters, reports (citing Russian language sources Izvestia and D-Pils):

While Russian financiers are proudly reporting about capital influx to the country, their foreign colleagues are calculating outflow of funds from Russia. It has been reported recently that Russians have placed $219.6bn on banks’ deposits abroad, which considerably exceeds deposits with domestic banks as well as the annual budget of the RF.

If so, who are the people placing a quarter of Russian GDP on outlandish accounts? Experts say, many accounts are opened by particular firms operating only to disguise the richest Russians. Funds are rapidly leaving the country: the amount of Russian capital in foreign banks, compared to the same rate last year, has grown by half. A little less than 50% of all funds “flew” to London, which is no wonder by the way, since the city has always been known as an untroubled place for capitals.

However, sums of money that Russians keep on deposits in European banks may get one shocked. $220bn! Which equals to 5.8 trillion rubles. The sum goes 0.8 trillion rubles beyond the revenue side of the Russian budget, or, e.g. it is equal to 24% of Russian GDP. Technically only a little share of funds kept in foreign banks belongs to private individuals: major sums are controlled by Russian firms. Here we should point out how Russian and European companies differ: a foreign company is traditionally controlled by hundreds or thousands of stockholders, whereas owners of a Russian one can be easily counted on fingers. So it turns out, that money held on bank accounts is of private origin but “wrapped legally”.

Not infrequently money of unknown origin comes abroad to be laundered. As for honestly earned capitals, they can often be found in foreign banks: their owners want to keep it safe on the threshold of upcoming elections in 2008.

There are several ways for funds to be brought out of the country. E.g. a businessman sells his company’s assets to foreigners inland, sometimes it’s just a share of the whole business, but it is enough for a company to be given an international status. The money, paid by foreign partners, stay in banks abroad. Another way to take funds to foreign banks is acquisition of assets abroad. There exist other variants, but in any case a business needs an account or a deposit in a foreign bank.

Both types of transactions are quickly getting popular. According to the project Merger.ru, within only 9 months Russian companies got hold of foreign firms to the amount of $4.2bn (data of the same period in 2005 – $2.3bn). Foreigners purchased Russian assets to the amount of $5.8bn ($6.7bn within the same period last year), which means that Russians buy business abroad in increasing frequency, whereas foreigners demonstrate an opposite tendency.

The executive manager of Mergers.ru Yuri Ignatshin sees two reasons for it. The first one – businessmen willing to escape political risk in view of presidential election, want to save their capitals. The second and the main reason implies that Russian companies have been maximally developed in Russia and now try to enter the international market. Especially acute the problem is in the fields of metallurgy industry and fuel and energy complex of Russia. All markets are shared, participants are known and can’t come to the agreement on sale or merger. The only way out is to approach international markets.

Thanks for reading La Russophobe !

It’s just skuttlebutt, but . . . the Russian economy may be even worse than we imagined

La Russophobe almost never reports information which really amounts to nothing more than unsourced gossip. But this one is just too interesting let slide by. The site IC-Russia, which basically concerns itself with tourism matters, reports (citing Russian language sources Izvestia and D-Pils):

While Russian financiers are proudly reporting about capital influx to the country, their foreign colleagues are calculating outflow of funds from Russia. It has been reported recently that Russians have placed $219.6bn on banks’ deposits abroad, which considerably exceeds deposits with domestic banks as well as the annual budget of the RF.

If so, who are the people placing a quarter of Russian GDP on outlandish accounts? Experts say, many accounts are opened by particular firms operating only to disguise the richest Russians. Funds are rapidly leaving the country: the amount of Russian capital in foreign banks, compared to the same rate last year, has grown by half. A little less than 50% of all funds “flew” to London, which is no wonder by the way, since the city has always been known as an untroubled place for capitals.

However, sums of money that Russians keep on deposits in European banks may get one shocked. $220bn! Which equals to 5.8 trillion rubles. The sum goes 0.8 trillion rubles beyond the revenue side of the Russian budget, or, e.g. it is equal to 24% of Russian GDP. Technically only a little share of funds kept in foreign banks belongs to private individuals: major sums are controlled by Russian firms. Here we should point out how Russian and European companies differ: a foreign company is traditionally controlled by hundreds or thousands of stockholders, whereas owners of a Russian one can be easily counted on fingers. So it turns out, that money held on bank accounts is of private origin but “wrapped legally”.

Not infrequently money of unknown origin comes abroad to be laundered. As for honestly earned capitals, they can often be found in foreign banks: their owners want to keep it safe on the threshold of upcoming elections in 2008.

There are several ways for funds to be brought out of the country. E.g. a businessman sells his company’s assets to foreigners inland, sometimes it’s just a share of the whole business, but it is enough for a company to be given an international status. The money, paid by foreign partners, stay in banks abroad. Another way to take funds to foreign banks is acquisition of assets abroad. There exist other variants, but in any case a business needs an account or a deposit in a foreign bank.

Both types of transactions are quickly getting popular. According to the project Merger.ru, within only 9 months Russian companies got hold of foreign firms to the amount of $4.2bn (data of the same period in 2005 – $2.3bn). Foreigners purchased Russian assets to the amount of $5.8bn ($6.7bn within the same period last year), which means that Russians buy business abroad in increasing frequency, whereas foreigners demonstrate an opposite tendency.

The executive manager of Mergers.ru Yuri Ignatshin sees two reasons for it. The first one – businessmen willing to escape political risk in view of presidential election, want to save their capitals. The second and the main reason implies that Russian companies have been maximally developed in Russia and now try to enter the international market. Especially acute the problem is in the fields of metallurgy industry and fuel and energy complex of Russia. All markets are shared, participants are known and can’t come to the agreement on sale or merger. The only way out is to approach international markets.

Thanks for reading La Russophobe !

It’s just skuttlebutt, but . . . the Russian economy may be even worse than we imagined

La Russophobe almost never reports information which really amounts to nothing more than unsourced gossip. But this one is just too interesting let slide by. The site IC-Russia, which basically concerns itself with tourism matters, reports (citing Russian language sources Izvestia and D-Pils):

While Russian financiers are proudly reporting about capital influx to the country, their foreign colleagues are calculating outflow of funds from Russia. It has been reported recently that Russians have placed $219.6bn on banks’ deposits abroad, which considerably exceeds deposits with domestic banks as well as the annual budget of the RF.

If so, who are the people placing a quarter of Russian GDP on outlandish accounts? Experts say, many accounts are opened by particular firms operating only to disguise the richest Russians. Funds are rapidly leaving the country: the amount of Russian capital in foreign banks, compared to the same rate last year, has grown by half. A little less than 50% of all funds “flew” to London, which is no wonder by the way, since the city has always been known as an untroubled place for capitals.

However, sums of money that Russians keep on deposits in European banks may get one shocked. $220bn! Which equals to 5.8 trillion rubles. The sum goes 0.8 trillion rubles beyond the revenue side of the Russian budget, or, e.g. it is equal to 24% of Russian GDP. Technically only a little share of funds kept in foreign banks belongs to private individuals: major sums are controlled by Russian firms. Here we should point out how Russian and European companies differ: a foreign company is traditionally controlled by hundreds or thousands of stockholders, whereas owners of a Russian one can be easily counted on fingers. So it turns out, that money held on bank accounts is of private origin but “wrapped legally”.

Not infrequently money of unknown origin comes abroad to be laundered. As for honestly earned capitals, they can often be found in foreign banks: their owners want to keep it safe on the threshold of upcoming elections in 2008.

There are several ways for funds to be brought out of the country. E.g. a businessman sells his company’s assets to foreigners inland, sometimes it’s just a share of the whole business, but it is enough for a company to be given an international status. The money, paid by foreign partners, stay in banks abroad. Another way to take funds to foreign banks is acquisition of assets abroad. There exist other variants, but in any case a business needs an account or a deposit in a foreign bank.

Both types of transactions are quickly getting popular. According to the project Merger.ru, within only 9 months Russian companies got hold of foreign firms to the amount of $4.2bn (data of the same period in 2005 – $2.3bn). Foreigners purchased Russian assets to the amount of $5.8bn ($6.7bn within the same period last year), which means that Russians buy business abroad in increasing frequency, whereas foreigners demonstrate an opposite tendency.

The executive manager of Mergers.ru Yuri Ignatshin sees two reasons for it. The first one – businessmen willing to escape political risk in view of presidential election, want to save their capitals. The second and the main reason implies that Russian companies have been maximally developed in Russia and now try to enter the international market. Especially acute the problem is in the fields of metallurgy industry and fuel and energy complex of Russia. All markets are shared, participants are known and can’t come to the agreement on sale or merger. The only way out is to approach international markets.

Thanks for reading La Russophobe !

It’s just skuttlebutt, but . . . the Russian economy may be even worse than we imagined

La Russophobe almost never reports information which really amounts to nothing more than unsourced gossip. But this one is just too interesting let slide by. The site IC-Russia, which basically concerns itself with tourism matters, reports (citing Russian language sources Izvestia and D-Pils):

While Russian financiers are proudly reporting about capital influx to the country, their foreign colleagues are calculating outflow of funds from Russia. It has been reported recently that Russians have placed $219.6bn on banks’ deposits abroad, which considerably exceeds deposits with domestic banks as well as the annual budget of the RF.

If so, who are the people placing a quarter of Russian GDP on outlandish accounts? Experts say, many accounts are opened by particular firms operating only to disguise the richest Russians. Funds are rapidly leaving the country: the amount of Russian capital in foreign banks, compared to the same rate last year, has grown by half. A little less than 50% of all funds “flew” to London, which is no wonder by the way, since the city has always been known as an untroubled place for capitals.

However, sums of money that Russians keep on deposits in European banks may get one shocked. $220bn! Which equals to 5.8 trillion rubles. The sum goes 0.8 trillion rubles beyond the revenue side of the Russian budget, or, e.g. it is equal to 24% of Russian GDP. Technically only a little share of funds kept in foreign banks belongs to private individuals: major sums are controlled by Russian firms. Here we should point out how Russian and European companies differ: a foreign company is traditionally controlled by hundreds or thousands of stockholders, whereas owners of a Russian one can be easily counted on fingers. So it turns out, that money held on bank accounts is of private origin but “wrapped legally”.

Not infrequently money of unknown origin comes abroad to be laundered. As for honestly earned capitals, they can often be found in foreign banks: their owners want to keep it safe on the threshold of upcoming elections in 2008.

There are several ways for funds to be brought out of the country. E.g. a businessman sells his company’s assets to foreigners inland, sometimes it’s just a share of the whole business, but it is enough for a company to be given an international status. The money, paid by foreign partners, stay in banks abroad. Another way to take funds to foreign banks is acquisition of assets abroad. There exist other variants, but in any case a business needs an account or a deposit in a foreign bank.

Both types of transactions are quickly getting popular. According to the project Merger.ru, within only 9 months Russian companies got hold of foreign firms to the amount of $4.2bn (data of the same period in 2005 – $2.3bn). Foreigners purchased Russian assets to the amount of $5.8bn ($6.7bn within the same period last year), which means that Russians buy business abroad in increasing frequency, whereas foreigners demonstrate an opposite tendency.

The executive manager of Mergers.ru Yuri Ignatshin sees two reasons for it. The first one – businessmen willing to escape political risk in view of presidential election, want to save their capitals. The second and the main reason implies that Russian companies have been maximally developed in Russia and now try to enter the international market. Especially acute the problem is in the fields of metallurgy industry and fuel and energy complex of Russia. All markets are shared, participants are known and can’t come to the agreement on sale or merger. The only way out is to approach international markets.

Thanks for reading La Russophobe !