Wild East

Monday, July 28, 2008 at 7:20 | Posted in russia | Leave a comment

The Russian government have harrased TNK-BP chief executive Robert Dudley into the point that he had no option but to leave Russia “temporarily”. BP has also found it necessary to withdraw 150 foreign specialists from the country. The Russian ambassador in London Yuri Fedotov dismisses the suggestion of a government backed attack. He says the situation is a “result of commonly applied rules”.

That is exactly the reason why western businesses should be particularly careful about investing into joint ventures in Russia. This applies especially to the oil and energy sector. Those “commonly applied rules” tend to include that Russians are happy to receive the venture capital and expertise from their western partners but as soon as the business is up and running, the western partners are smoked out of the country and far too often the business is taken over with government back-up.

The only positive side of the TNK-BP affair could be that western investors might realize that Russia is not a country with rule of law but a Wild East where anything can happen. Just remember what happened to Mikhail Khodorkovsky!

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