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“In Russia, government is more important than business,”
said Daniel Satinsky, president of the US-Russia Chamber of Commerce in New
England, at a presentation to the Fletcher community on February 10 as part
of the International Business Relations Global Speaker Series. During his
talk on the state of business and economic development in Russia following
the financial crisis of 1998, Mr. Satinsky quoted this sagely advice given
to him during his travels in Russia.
Mr. Satinsky, an alumnus of Fletcher, is no stranger to
Russia. An attorney by trade, for the last fifteen years he has been
developing business prospects in key industries such as trade, technology
and telecommunications, most notably in the Yaroslavl’ Region.
In the early to mid 1990s, government took a backseat to business, he went
on to add, which perhaps explains Russian President Vladimir Putin’s
tendency to serve as a counterweight to some of the heady excesses following
the euphoria surrounding the demise of the Soviet economy.
When a member of the audience questioned the legitimacy of the recent arrest
of Russian oil tycoon Mikhail Khodorkovsky on charges of fraud, tax evasion
and embezzlement, Mr Satinsky countered that by interfering with government
policy, Mr. Khodorkovsky, had incurred the wrath of the Kremlin, which under
President Putin has discouraged big business from playing a role in
government affairs.
“Many people believe that he (Khodorkovsky) has brought this upon himself,”
said Mr. Satinsky, explaining that the oil baron was involved in various
activities geared toward furthering his own business interests at the
expense of official policy.
Charting the dizzying journey of Russia’s economy since the collapse of the
Soviet Union, Mr. Satinsky pointed out that the disappearance of the mighty
Soviet distribution apparatus only made life worse for the average Russian.
While Westerners licked their lips at the prospect of a gigantic Russian
market, they often found themselves frustrated at the “illusion of reform”.
There were windows of opportunities in certain industries, but the Russian
government was hesitant to allow foreigners into certain markets until the
state-owned companies were ready to compete.
The devaluation of the ruble in 1998, which led to the Russian government
imposing a three-month moratorium on the payment of foreign debt, marked a
critical point in Russia’s fortunes. With the credibility of the Russian
financial system in tatters, many doubted whether the economy would recover
from the severe balance of payments crisis. To that end, Mr. Satinsky
remarked that Russia’s inherent strengths as the world’s largest combined
producer of oil and gas, along with the much-needed stability that Putin has
brought to the economy, have brought about an abrupt turnaround in Russia’s
economic situation.
According to Mr. Satinsky’s statistics, Russia’s economy grew at a robust
6.8% in 2003. Domestic investment is growing at an annualized rate of 13.5%
and the country remains a key strategic market for multinationals. Sectors
such as mobile phones and retail are witnessing tremendous growth and
present clear opportunities for foreign investors to cash in on a surging
consumer market.
Mr. Satinsky concluded his remarks by stating that structural problems
remain, such as limited diversification in the economy, unsophisticated
capital markets and a large concentration of wealth in the hands of a few
interest groups. But by and large, he stressed, the new Russia has been
revived by a strong state and presents a wonderful economic opportunity for
its citizens and the international community. Addressing how Fletcher
students might capitalize on this, he exhorted students to seize the
initiative and travel to Russia to seek opportunities relevant to their
interests. Not that a Fletcher student or alumnus has ever needed an
invitation to travel.
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