Innovation Blog

Roubles from rubble – Take your Russian by the hand

Monday, January 18, 2010 | Posted by: Brian Maguire
Categories: Business | Tags: innovation, government, entrepreneur, google, Russia, Boris Berezovsky, London Evening Standard, Sergey Brin, Putin, Dmitry Medvedev, Abramovitch, Japan

Russia is aspiring to be a global force for the innovative and ambitious

“The secret of politics?” said Bismark, “Make a good treaty with Russia.” Otto von Bismark, Prussian Prime Minister, founder and Chancellor of the German Empire, knew how to separate roubles from rubble. Today, more than 100 years after Bismark, the dead dog of communism has awakened as a proud lion. Russia ended 2008 with GDP growth of 5.6%, following 10 straight years of growth averaging seven per cent.

While most of Europe eyes China’s economic ascendency, Russia is about to embark on a febrile programme of renovation, innovation and sustained ambition. Central to President Medvedev’s theme of national ambition is intellectual capacity and high quality consumerism. This lion hasn’t roared yet, but it will, and perhaps louder than any frostbitten Serbian bear has ever done.

Nicholas I lamented: “I do not rule Russian, ten thousand clerks do.” He would, with ease, recognise modern Russia. Medvedev’s self-interest is tied to the prosperity of the motherland: wounded as oil prices tumbled; humbled as its newly minted billionaires fumbled in pools of evaporating finance; Russia’s leadership has staked its future on the reshaping of business as usual.

The Kremlin-stained hierarchy of Russian government is torn between thoroughbred pocket-liners; and radical reformers - true believers in a better, stronger Russia. Endemic corruption is openly acknowledged by Medvedev and Putin as a cancerous threat to Russia’s stability. But if history’s dialectic brings anything to our sense of what happens next, it reveals that Russian true believers are thoroughly capable of out-maneuvering vested interests; Russians are determined, maybe even more so than the Japanese.

In December, Alexei Kudrin, the Russian finance minister, attempted to woe investors in preparation for Russia’s return to international debt markets. Moscow is seeking up to $17.8bn in Eurobond financing next year, to cover deficit spending. He faced a slew of issues, not least, the treatment by Russian authorities of foreign senior executives.

While Putin in particular is not averse to heavyweight political boxing, both he and Medvedev know they cannot create a stronger Russia without a resilient legal framework and the smothering of corrupt corporate practices. These changes will take more than a generation, but headline grabbing success stories will breed more success.

In Dublin, about five years ago, I interviewed the MD of a pharmaceutical software company; he explained that most of his programmers were Russian. We stopped at one desk to speak with a thirty-something techie whose previous job had been software programming for missile defence; there were many former defence programmers in that office – which meant Dublin had been invaded, ever so discreetly, or Russia was a little defence-lite.

The challenge for Britain is to maintain a level of intelligent ability and entrepreneurial zeal enabling us to remain a nation of discoverers and innovators. Sergey Brin, the Russian-born Google creator is just one example of California’s global pulling-power; but when the world is not enough, billionaires put there money where there hearth was.

So far, Putin has resisted the political input of Russian oligarchs and billionaires, but when a nation needs heros, not villains, the airbrushed reality of the new corporate Russia will be the all-new court of the modern Tsar. An simple measure of Russia’s corporate star-power is to list media profiled Russian billionaires against their UK counterparts. It wasn’t a Rothschild or Grosvenor bailing out the London Evening Standard, or Chelsea.

The underlying reason many Russians such as Lebedev, Deripaski, and Abramovitch command attention, is their energetic pursuit of new projects. Lesser mortals such as Boris Berezovsky are not associated with new and dynamic business pursuits; the reason – age. Russia’s new West-Brit Pack are young, educated, driven, comfortable in Western, global, business structures. Sergey Brin may be the beaming face of US-based Google, but European history observes that “A Russian never forgets”, not least, his homeland.

Smart British businesses will gauge if they can beat the bear at its own game, or, as Bismark said of noble enterprises, “Make a good treaty with Russia.”

Must Watch:

Investing In Russia – Bloomberg Video Clip

Russian Billionaires – Bloomberg Video Clip

Russian Billionaire Mikhail Prokhorov – Russia Today, Video Clip