For those of us that are talking to companies about Russia, and face the comment that Russia is not an easy place to do business at the moment, a few comments;
- EU Sanctions, such as they are, are very, very strictly limited. It mainly revolves around:
- A travel ban on a few named Russians close to the President
- Some highly specialised oil and gas technology mainly for shale and sub Arctic exploration
- Military and so called “dual use” technology. This dual use is again quite specific, and most technology and equipment remains unaffected. Exports continue apace.
- Russian “Sanctions” on the EU are not sanctions at all. They are limitations on certain products, whose aim is to encourage Russian industry to improve. The Russians did this to good effect with their meat industry years ago, thus significantly improving their ability to produce quality meat, instead of importing almost all of it, as they previously did. These limitations are of little concern except of course to those exporters that are directly affected. Meat, dairy and fish are affected to a greater or lesser extent. Clothing is likely to join the list shortly. Even here, I would urge an optimistic note:
- The legality of these “sanctions” is currently being questioned before the WTO.
- The Russians don’t like being deprived of some of these products, so a lifting of some of these limitations is likely.
- Even if Russia succeeds in improving its industry, as it did with meat, and which in itself is a fair objective, they will still be importing, in exactly the same way that the UK – hardly a developing economy – imports vast quantities of meat from Thailand and elsewhere.
- The nominal lifetime of these measures is 12 months, and even that, I believe is unlikely.
Russia can ill afford a continuation of economic hostility. The EU accounts for well over half its imports, and I believe the lack of fallout from these sanctions to be the most notable thing about them. Neither the EU nor Russia want to have a serious falling out.
And as for the doomsayers that point out that Russia is turning towards Asia Pacific, Latin America and others, I would say “So what? So are we..So is everybody.” Plus that change. As the French say. Nobody can seriously suggest that the massive (280bn Euros) business that exists between Russia and Europe is about to be dwarfed by anything the Russians put into place elsewhere; that will take at least ten years.
Business continued throughout the period of the Cold War, and business will continue now. For anybody still reading (!), these links might be helpful :
We should encourage companies to attend “Russia: Practical Solutions” for a full and comprehensive update on the Sanctions issue, as well as meeting specialists on tax, legal issues, travel, freight, working with distributors, getting paid, etc, etc, etc.
Hope this helps!