The recent thaw in US-Russia relations is paving the way for Washington businesses to return to Moscow.
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| US President Donald Trump revealed that he is trying to make some economic development agreements with Russia. (Source: Getty Images) |
After landmark talks on February 18 in Riyadh, Saudi Arabia, US Secretary of State Marco Rubio hailed the “extraordinary economic and geopolitical opportunities” that the world’s largest economy and Russia could seize if the extraordinary military campaign in Ukraine ended.
President Donald Trump also revealed that he is trying to make some economic development agreements with the country of birch.
However, in 2022, when Russia launched a special military operation in Ukraine, an exodus of companies from President Putin's country began. There are very few American businesses operating in Russia, and that makes President Trump's plan difficult.
Kirill Dmitriev, CEO of the Russian Direct Investment Fund (RDIF), hopes that some Washington businesses will return to Moscow as soon as the second quarter of 2025.
Meanwhile, analysts are skeptical that the “reward” for reinvestment in the birch country will be too small for Washington businesses to return.
“I don’t think many businesses will enter a business environment with such a risk factor,” said Janis Kluge, a researcher at the German Institute for Security and International Affairs (SWP).
A rather challenging environment
According to CNN , Russia's business environment has long been quite challenging.
But since the start of the special military operation and the economic sanctions imposed on Russia by the West, the country has become a more difficult place for businesses. Perhaps the biggest risk facing foreign companies today is the possibility of the Kremlin seizing their assets.
Specifically, in 2023, Russian President Vladimir Putin signed a decree allowing the government to temporarily place foreign assets in the country under its control. Months later, the Kremlin nationalized the assets of French yogurt maker Danone and Danish beer maker Carlsberg.
With the US, in May 2024, Russian President Vladimir Putin signed a decree allowing the confiscation of assets of individuals and entities related to the US in Russia if Washington confiscates Moscow's assets abroad.
Meanwhile, according to Mr. Kluge, the Russian economy has become less integrated with the rest of the world, largely due to sanctions.
Soon after the military campaign began, the United States, the European Union (EU), the United Kingdom and Canada blocked a number of Russian banks from the international payment system SWIFT. This made it much more difficult for banks to send and receive money from abroad.
The world’s largest economy would not be able to lift the ban without EU cooperation because SWIFT is based in Belgium, Kluge added. The same goes for Russian assets frozen in the US. US allies do not necessarily have to reverse existing sanctions against Moscow.
“It has become very expensive and cumbersome to conduct a transaction in Western currencies in Russia. This makes it impossible for many Western companies to continue doing business in Russia,” said Mr. Kluge.
Wells Fargo banking analyst Mike Mayo predicts that it is unlikely that any US banks will return to Russia because Wall Street has become much more strict about where they invest than it used to be.
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| According to experts, the Russian economy has become less integrated with the rest of the world because of sanctions. (Source: Russia Insider) |
Competitors
Recalling the heyday of the Russian economy, Elina Ribakova, a senior fellow at the Washington-based Peterson Institute for International Economics, said it was the period from the early 2000s to around 2014 — coinciding with the oil price boom.
Moscow benefited from exporting large amounts of oil and natural gas to the rest of the world during that time, including sales to Washington.
A large proportion of foreign companies setting up in Russia are energy producers and retailers, Elina Ribakova said, hoping to sell their products to the country's growing middle class.
Now the situation has changed dramatically because the US no longer needs Russia's natural resources.
The world's largest economy produces far more oil and natural gas than in decades past and has become a net exporter of the fuel. Washington is now in direct competition with Moscow in the global energy market.
For example, in recent times, Europe has increased its imports of liquefied natural gas (LNG) from the US to replace traditional gas imports from Russia.
“Russia’s special military campaign has also shrunk the country’s middle class. The entire Russian economy is now driven by the military-industrial complex. And this is an area where the United States and Russia are unlikely to find natural cooperation,” Elina Ribakova noted.
| "With the Trump administration, every day, every week can change a lot. And the situation of businesses returning to Russia will be high risk, low profit" - Associate Professor Michael Rochlitz at Oxford University. |
“High risk, low return”?
For businesses, analysts note, the biggest headache is the uncertainty between Russia and the US.
“What happens if the relationship changes? That’s really hard to predict,” noted Peterson Institute for International Economics senior fellow.
The uncertainty will have an impact on both Russia and US businesses, argues Associate Professor Michael Rochlitz at Oxford University.
This Associate Professor also frankly commented: “With the Trump administration, every day, every week can change a lot. And the situation of businesses returning to Russia will be high risk, low profit.”
On the Russian side, experts say it is unlikely that the country will be open to welcoming foreign brands back. President Vladimir Putin has said that Russian manufacturers should be given priority in the event of a return of foreign businesses.
Meanwhile, Pavel Lyulin, vice president of the Association of Shopping Centers of Russia, Belarus and Kazakhstan, revealed that the best sales positions, which were once occupied by Western brands, are now occupied. These are long-term contracts, because such positions will be fought over.
Another reality is that the Russia that American businesses left is no longer the same Russia that they will return to. So the road is still long and as Carl Weinberg, chief economist at High Frequency Economics, asserts, big American businesses will not return to Russia quickly, if at all, it will certainly be a long time!
Source: https://baoquocte.vn/duoc-ong-trump-mo-duong-doanh-nghiep-my-co-gat-rao-can-nhan-phan-thuong-va-tro-lai-nga-306168.html
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