Writing in the Financial Times, Russophile maniac Alexander Bulygin (CEO of “Rusal,” the Russian aluminum conglomerate) says “there’s no mystery in Russia pursuing its interests.” Indeed. And there wasn’t any about Nazi Germany or the Communist USSR doing so either. Here the full load of crap, with LR’s running commentary:
Russian commentators citing Winston Churchill’s memorable but often misquoted 1939 radio speech “It [Russia] is a riddle wrapped in a mystery inside an enigma” regularly omit the adjoining insight that, when seeking to predict Russia’s response to any event, the key is: “Russian national interest.” There is nothing mysterious about the Kremlin’s robust defence of national interest. Like any other government, it is simply protecting what it holds important for the country and for its people. It surprises me that anyone questions whether Russia should rightly, proudly, fairly protect its interests. Russian businesses, especially those championing the drive to the international capital markets, must naturally do the same.
LR: Can you imagine a Gestapo officer writing “it surprises me that anyone questions whether Nazi Germany should rightly, proudly, fairly protect its interests”? Can you imagine what Russians would say if Shamil Basaeyev wrote “it surprises me that anyone questions whether Chechnya should rightly, proudly, fairly protect its interests”?
Rusal commissioned the Economist Intelligence Unit to conduct a study, including interviews with 300 multinational chief executives, into perceptions of Russian business. The report, The Russians are Coming: Understanding Emerging Multinationals, makes compelling but at times alarming reading.
LR: Only Rusal, huh? Kremlin had nothing to do with it, right? Ummm . . . ok. If you say so, dude.
The emergence of new multinationals in Russia is part of a broader global phenomenon. As economic power has shifted towards emerging markets, Asian and Latin American companies were the first to break on to the global business scene. Russian companies are relative latecomers but their expansion, facilitated by oil liquidity, has been rapid. Russia is now the third largest foreign investor among emerging markets. The emergence of Russia as a global player has clearly surprised the established business world. Some chief executives interviewed by the EIU saw the extent of the corporate advance as a strategic move by the Kremlin to entrench Russia’s geopolitical influence. Russian companies were perceived by some as having poor management practices and structures, using outmoded and defunct technology. Such misinformed views greatly disturb me.
LR: “third largest foreign investor among emerging markets” in translation means “third least poor of all the desperately poor, backward countries, sucking up wealth from the people to play silly power games.
Chief executives doing business in or with Russia had a more positive view: they recognised that Russia had changed and for some time now had offered first-rate opportunities for growth. Several suggested it was vital that a broader spectrum of the international business community recognised that Russian business was primarily driven by commercial logic and competitive advantage not by political agendas.
LR: Notice how he doesn’t quote a single “chief executive”?
The rapid pick-up in Russian investment abroad is driven by factors such as gaining critical mass to survive consolidation; gaining access to new markets, raw materials, technology transfer and management know-how; coping with excess liquidity; and the lack of expansion opportunities at home. Russian companies enjoy significant competitive advantages over established players: emerging markets know-how, a powerful but flexible corporate structure, liquidity, a highly educated staff pool and enormous ambition. These characteristics allow Russian businesses to act quickly, operate at low cost and consider acquisitions in emerging and developed markets that are too risky or problematic for other companies.
LR: “significant competitive advantages” in translation means Russians work for slave wages and perish before they need much healthcare or pension.
As the drive to listing and cross-border transactions continues, Russian business is adopting best practice, rising to the challenge of transparency. This commitment is far-reaching from operational structure and financial reporting to corporate citizenship and sustainable development. This cannot be a fast-tracked process. Changing behaviour and stripping away long-standing, stereotypical perceptions of Russia will happen in years, not months. Even for non-listed companies, there have been important changes in corporate governance and disclosure. Rusal, for example, has developed an 18-month corporate governance programme, with the help of the European Bank for Reconstruction and Development and International Finance Corporation, appointing an independent board among other activities. There is often less criticism of western private equity firms than of private Russian enterprises.
LR: “rising to the challenge of transparency” in translation means that those who dare to challenge the Kremlin with ideas of transparency, like Mikhail Khodorkovsky, go to prison in Siberia (if they’re lucky enough not to get poisoned or shot).
Russian companies are taking dramatic steps to shed a debilitating image: we are not only credible business partners, but real competitors to and, indeed, owners of, some of the world’s largest, most innovative companies. The combined strength of Rusal, Sual and the alumina assets of Glencore making an enlarged company and the number one player in the global aluminium industry demonstrates that the Russians are indeed coming. With the encouragement, understanding and healthy competition of the international business community, I am confident that the enigma image can be put aside for good.
LR: I bet if asked in 1999 he’d have said Russians wouldn’t have elected a proud KGB spy as their president. LR is confident that this neanderthal’s ravings can be put aside for good. But she’s not sure they will be, not in the neo-Soviet Union led by a proud KGB spy (note how he’s conspicuous by his absence from this venal little diatribe).