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Russia’s Antics Wearing Thin on Foreign Investors

For a while it seemed that there was practically no limit to the enthusiasm held by Western businesses to get into Russia no matter how alarming the political situation. However, perhaps in light of the credit crunch and the healthy return of risk, Russia’s myriad confrontations and prickly relations with the West may be beginning to wear thin on the business community. Today for example in FT, in a rather unrelated story about the departure of John Clare from retailer DSG International (which operates the Dixons franchises), we are given some insight into the group’s failed attempt to purchase Eldorado, a retail chain in Russia:

“The relationships Russia has with the rest of the western world are in a rather different space than a couple of years ago,” he says. Commenting against the background of the diplomatic row involving Russia’s refusal to extradite the suspect in the murder of Alexander Litvinenko, he says: “I hope that from a personal perspective or a corporate perspective that turns out to be short term but you don’t know. Everything’s a bit up in the air at the moment.”

This follows on comments made by Mr. Clare about doing business in Russia made last June:

“There persists today a number of corporate economic and political risks associated with a group such as ours operating in the Russian market at this time,” Clare said in the conference call. He said the decision followed “overall due diligence,” adding that he expects the company to “re-examine” the market in future.

It seems that DSG, like many other firms, recognize that the transfer of power period brings with it a lot of instability and uncertainty, and that it is better not to commit capital to Russia until after the elections.