Does Russian business unite with the West? (ABSTRACT)

MARI TSIKLAURI

Russian-American business relations are, undoubtedly, a very interesting and significant topic for Georgian economy, moreover for policy.

We will speak on it along with latest and expected events. The Russian firm “Lukoil” has recently opened the first petrol station in Manhattan. For the first time in Russian history, its shares were entered in the listing of the New York Stock Exchange. America’s interest towards Russian business is obvious.
Events going on around the largest Russian oil companies TOC and UKOS-Siboil clearly testify to the increased interest of leading western businesses towards Russian companies.
Leading American companies Chevron Texaco and Exxon Mobil intend to purchase 25% of UKOS-Siboil shares. According to the Wall-Street Journal sources, competitors will make application for the purchase of the package this week. If the deal is made, it will become the largest example of foreign investments in Russia far exceeding this year’s agreement on the formation of joint enterprise between British BP and Russian TOC. At the same time, the deal can become a good background for the meeting of Vladimir Putin and George Bush on September 24-27.
“After BP has purchased TOC, foreign companies became less afraid of making investments in Russia. However, not many oil companies are offered for sale in Russia so investors will have to fight for UKOS-Siboil shares’, – says Eugeny Satskov.
Apart from the increase of capitalisation, formation of joint companies with large Russian oil companies is attractive for Western partners from the viewpoint of purchasing additional processing capacities and new market outlet. Russian partners are, first of all, interested in finances and decrease of credit rates. In particular, credits are twice as cheaper for the companies that unite with western oil businessmen than exclusively for Russian ones.
Western investors appreciate efforts of the Russian Government in simplifying regulation processes (for instance, it became easier to obtain permission for construction), but they accentuate that judicial and bank systems need further reforms for winning investors’ trust. After 12 years of the USSR disintegration, Russia itself has actively and successfully established control over economy of the whole post-Soviet area. Large Russian companies do their best to expand business in CIS countries. This process seemed to reach culmination by the mid 2003 when Russian companies did not only manage to make some large deals, but also to achieve good results – to establish control over infrastructure branches of co-marginal states. This means economic as well as political influence. This very influence should be considered as main force that makes Russian business purchase assets in CIS. Russia seems to have solved the most actual political problem – regaining control over CIS countries.
In 2003, Georgia became one of the main countries for take-over deals. We would not exaggerate by saying that principal viable branches such as gas supply, energy, telecommunications are controlled or about to be controlled by Moscow.
In conclusion, we should stress that large deals and take-overs of Russian companies’ in CIS turned out to be peaceful. As such deals are not, in fact, made without prior agreement of the government, we should admit that governments of the countries do not oppose much Moscow’s regain of control over their economies. As a result, by the mid 2003 Russia has gained control over important infrastructure and processing branches of Georgia, Armenia, Ukraine, Turkmenistan, Uzbekistan and Kazakhstan. As for large assets in other countries, their turn might either come in nearest future or there might be nothing to buy there.
As we can see, after the end of he war against Iraq a new order has come to the world. Thanks to it, states start active co-operation on political and economic level whereas Georgia finds itself in passive reserve.
Our misfortune is that we expected establishment of a different order. We can only guess whether we might fit in with the new order or not.