Two decades have passed since the decline of USSR. Several independent countries have come into being. The political observers and politicians creating the present have ambivalent feelings about this independence. How much of USSR tradition is there in Russian today’s reality? Is the Russian foreign policy manifested by brandishing rockets with atomic warheads? Is Russia still a country whose strength depends on the iron shoe’s power which is ready to tread every voice of independence?
Certainly, Russia is a country with a huge military potential deriving from rusty missiles or space technology. Many decades of intensive armaments contributed to the growing popularity of military solutions among customers all over the world. What is more, Russia is able to secure its own business, especially in the nearest surroundings. Russia’s neighbors are not the only focus of its attention. Let us look at the other actions of the former superpower which is now a country with ambitions that originate from the past, though the military power is not only its method of efficient expansion.
Business strategy
Just several weeks ago there was an inauguration of a project showing that Russia can execute its projects without military pressure. The project is about the opening of the first gas pipeline Nord Stream where the gas flew to the Europe for the first time on 8th of November 2011. When the German chancellor Gerhard Schroeder agreed for the pipeline construction, people realized that Russia managed to come out from the 90’s collapse and that it is able to actively influence international relations. Gerhard Schroeder was paid with interest for the aid he gave: after the defeat of his party during parliament elections he received a lucrative post as a member of supervisory board of the consortium building the gas pipeline.
In the articles in Financial Times] dating from May 2011 we could find some information about Russian bank’s taking overs in Eastern and Central Europe. Among the banks in both regions many of them are the daughter-companies which belong to the institutions having their headquarters in Western Europe where the crisis is strongly noticeable. While looking for some money, the headquarters are willing to sell their shares to Russian banks which are strongly interested in the Central Europe’s market.
In the interview for the Financial Times, the VTB (the second largest bank in Russia) director Andrei Kostin admitted: “we develop in a constitutional way, but when we see a good occasion – we buy”.
According to the Stratfor’s director George Friedman, “Russia wants to use the crisis caused by huge debts in Europe in order to expand its political influences on the continent. It has raised sizeable amounts of cash.”
Today, Russia takes the opportunity to make the most of that cash stock. Let’s evoke the article from the Bloomberg Businessweek dated from the 15th September: it is stated that Russian capital has done some impressive shopping in Eastern-Central Europe increasing its resource’s value to near 2,8 milliard dollars at the same time. They have managed to do this in only three years. The example was the Sberbank’s purchase of the Austrian Oesterreichische Volksbanken’s shares as well as the Russian Railways’ investments in Slovak railways. Purchases in Poland are also discussed.
Iwona Wiśniewska, the author of the reports for the Eastern Studies Center claims: “Since 2005 we have been observing a dynamic increase of Russian foreign direct investments. They went up from 10 million dollars in 2003 to the record-breaking amount of 55,6 milliard dollars in 2008. In spite of the economic crisis, the Russian investments were still significant – they reached 52 milliard dollars. In 2010 Russia was the eighth biggest foreign investor in the world, and in so called “rising economies” it was on the third place after Hongkong and China”.
The important thing is that these data include only the investments of the transactors registered in Russia. We also need to take into consideration the Russian actions which are difficult to estimate and which are becoming more and more popular thanks to some tax paradises like Cyprus, Sheep Islands or Gibraltar and also to some international concerns where Russia has its shares.
As noted in the OSW report, Russia can always count on an influential lobbyist – the Kremlin – which openly supports investments in different sectors. It does not happen without reason. Many of the biggest companies, active abroad, are directly related to Kremlin. Some of them do not hide this fact; the Russian government is still a shareholder of many largest banks and concerns. Sometimes, they act under the pretence of being a private enterprise which still belongs to the Kremlin-related oligarchs.
Taking care of the image
Those unclear connections badly influence the image of Russian business. The OSW report shows the results of the studies conducted in 2010 by Edelman – a public relations international company. These results show that the image of Russian business is not quite good. Businessmen from developed countries are not convinced of this image; however the situation is better in the economies of developing countries. The Russian image is getting better and better. “The improvement of Russian image and capital is caused by the rhetoric’s change from confrontational to cooperative in foreign politics as well as improving Russia’s promotion abroad. The Russian TV “Russia Today” and the PR agencies (Gpuls from Brussels or the American Hill & Knowlton) play a significant role in this process.
Let’s take a closer look at the RT station whose materials I often cited in my blog. This television is not only providing us with professional materials presented from the Russian point of view and consistent with the Russian reason of state. Thanks to the massive Internet use it became something similar to the “Radio Free Europe”. The independent journalists, commentators, who are hard to find in American or British media (they are called the “conspiracy theories hunters” once they appear) are invited to RT for discussions as trustful and competent publicists and specialists. They are invited also because they criticize the Western politics.
It is also worth mentioning that this TV station does not only broadcast in English language, but also in Spanish after a record of an increasing amount of Spanish customers.
International cooperation
A significant change in Russian diplomacy is also visible in its international actions. Russia, formerly perceived as a country using brutal forces, is now the initiator of international agreements and pacts. One of the examples of these agreements is Shanghai Cooperation Organization or recently announced by the Prime Minister Vladimir Putin the Eurasian Union. This initiative aims to create a free commerce region on the huge area of Europe and Asia. Despite the fact that many people associate it with USSR, it became a largely discussed international project.
All these elements cause that, at least on the outside, Russia tries to break with its image of dull power being only a background for mafia or the market for arm and natural resources trade. The new Russian approach intrigues many people, but we have to remember that often there’s something totally different behind the image created by agencies. Sometimes, everything is not as visible as Czech “Karlove Vary” where there are more Russians than native Czechs.
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