Getting on-line in Ethiopia is a nightmare and so it has taken me a while to comment on a strange article in the Financial Times that had me choking on my breakfast of injera and zil zil tibs.
Peter Hambro, executive chairman of Peter Hambro Mining, an Aim-listed company that is one of Russia’s biggest gold miners, said the claim from Tony Blair that western companies could shun Russia unless it shared democratic values “ran the risk of being damaging” for British businesses in Russia. […] Hans Jörg Rudloff, chairman of Barclays Capital, said the government was mistaken when it publicly expressed concern about the growing risks of investing in Russia, ahead of last week’s G8 talks. “Their approach looks unbalanced,” Mr Rudloff said. “Russia’s transition to a market economy has been successful and cannot be undone.”
And later in the article, readers are reminded that Royal Dutch Shell was forced last November to sell control of its $20bn Sakhalin-2 oil and gas venture to state-controlled Gazprom and BP’s flagship Russia venture TNK-BP is now being threatened with the loss of its licence to develop the east Siberian Kovykta field. So how exactly are these de facto nationalisation (in reality seizing assets for the benefit of members of Putin’s clique) a sign that “Russia’s transition to a market economy has been successful and cannot be undone”? Seems to me that Putin is doing an excellent job of undoing it.
That’s just standard cowardly capitalism – see Google in China, News Corps’s support of the Government wherever it happens to be, and any number of other examples. However bad things are there in fact, they will always back the vision of the world favoured by people who can take their business away.
In fact, the worse things get, the more likely transnational businesses are to take that appeasing line, because the sensitivity to criticism of governments and the degree of arbitrary power they have is covariant.
Businessmen tend to think that if they cuddle up to those in power their business will be spared (only other business enterprises will be hit). One can find plenty of examples of Americans and others who tried to cozy up to Chevez (so it is not just Putin).
Of course businessmen vary, but most are “pragmatic” they are “problem solvers” not (mostly) men of principle, so of course they try and cosy up to those who could do them harm.
After all it often works in Western countries – cosy up to politicians and administrators and your company will not be hit (or at least will be hit less badly that rivals will be hit). The near abitrary power of the modern state (via such things as “anti trust” and “competition policy”) adds to the temptation to cosy up to those in power.
And of course for those who do sometimes have moral doubts about what they are doing there is the following defence – “I am not sucking up for my own gain, I am trying to protect the shareholders and the pensions of the staff”.
Of course when dealing with someone like Putin (or Chevez or Comrade Bob or …..) the above attitude is silly – it is better (if one has been foolish enough to make an investment in the first place) to get out fast (taking whatever losses have to be taken) than try and “save the investment” (and make an even bigger loss), but modern businessmen do not tend to think that way – they think they can always “make a deal”.
After all the newspaper you were reading (the Financial Times) has represented the principle of business people (especially in financial services) making deals with the forces of collectivism (sometimes with actual Marxists – indeed many Marxists used to work on the F.T.) for decades.
I think I would put it as “Businessmen make great sycophants if they think there is money in it”. This is usually not wise, even for the business in question other than in the short term
I think the logic is “if I am nice to the crocodile, he will spare me” whereas in reality at best he will just eat him last.
Of course, the Russian government does not descriminate against foreign companies. Ooooh no.
Quite. And this fact makes rather a mockery of those ‘No Logo’ antiglobalisation morons who contend that multinationals are taking over the world. The strongest multinational corporation is far weaker than even the weakest government when operating on its own soil.
An opportunity is an opportunity. It’s a free world. It’s their money to risk. If BP, Shell, etc., don’t want to do business in Russia, someone else will, and they know it.
That’s rich. He’s worried about Tony’s rare attack of sanity as being dangerous to his business.
Memo to Mr. Hambro: When you’re in the middle of a minefield and dancing a bog stomp is probably not a good time to worry about the dangers of smoking. Focus, people, focus!
Nothing is Free: Maybe someone else will move into Russia if Shell, etc. pull out. If they do, they’ll be facing a certain degree of risk of keptocracy that is usually only seen in Central Africa. It’s simply coincidence that the “violations” are found about ten minutes after the permanent infrastructure is complete. Russia, given their tradition of theft in commerce both recently and since 1917, is simply not a good credit risk.