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Avoiding the Car Crash in Russian Business

Blogging on the FT’s beyondbrics, Charles Glover, speaking to Chris Weafer, presents the general view of Russia’s business community on the various calamities of Khodorkovsky, Browder, etc.:  1) they somehow deserved it, and 2) it could never happen to me.

But that is little comfort for those who don’t know the rules and are thinking of investing. Chris Weafer, head of strategy at Uralsib, the Moscow investment bank, said the Magnitsky case has affected different groups of investors differently.

The answer is different for those investors already engaged in Russia and those that still view the country as high risk. The former group see such events [Magnitsky] as something that won’t happen to them, eg like being in a car crash.

The latter see such events as confirming their reluctant stance. But, if President Medvedev’s modernisation plan, ie to create a diversified economy, is to succeed. he needs to shift many more investors from the reluctant to the engaged category.

In truth, the Kremlin needs to switch from defending special interests and informal “codes:” of behaviour, and start enforcing laws, as president Dmitry Medvedev has pledged. But few are holding their breath.