“The Russian economy is weak and is weakened by
the crisis. Meanwhile, Swedish companies has an opportunity to help Ukraine in this
situation. It builds a shared future.”
This is an opinion piece written by the
entrepreneur Dan Olofsson, published in the Swedish finiancial newspaper Dagens
Industri on March 6, 2014:
Last year
when I took part in The Russia Forum in Moscow (Russia’s own version of the
World Economic Forum in Davos), I gained one very important insight: the
Russian investors preferred to move their capital abroad rather than invest it
in Russia.
As a Swede,
I was struck by the thought “How is Russia going to attract foreign investors
if their own investors don’t believe in their own country’s future?”
The
explanations given in direct, personal conversations with key persons was an
uncertainty regarding in which direction Putin’s leadership is heading, an
uncertainty regarding a stable independent legal system, what happens with currency
regulation, and so on. In short, the risk that another version of the Soviet
dictatorship will be resurrected and that the rules of the game will change
suddenly.
Russia has
an economical elite, close to Putin, that understands how the world economy
works. The GDP in Russia is about 6% of the combined GDP of the USA and the EU.
Also, the Russian economy is primarily based on the export of oil and gas, foremost
to the EU, which makes the country very vulnerable. If you add the fact that
Russia hasn’t been very successful in building other forms of industry, you
realize that in the coming years, Russia will depend on the willingness of both
Russian and foreign investors to invest in different business areas. Russia
cannot develop successfully if it isn’t part of the global market economy.
A further
factor is that many Russian investors have become rich very quickly, meaning
that they don’t have the industrial grounding and the resulting loyalty, which characterizes
many Swedish companies. Their capital is, in other words, more mobile, which is
something you notice today around the world where exclusive real estate is
sold. This is another thing that adds to Russia’s vulnerability.
So when US
Secretary of State John Kerry says that they will isolate Russia politically,
economically, and diplomatically if Russia doesn’t tone down the threats
against Ukraine, this is a devastating scenario for Russia’s future
development. A decrease in EU import of oil and gas combined with the situation
where no one wants to invest, will basically close down Russian business.
So how will
Russia act? Obviously, this is something that no outsider can know. But with a
strong leader like Putin that can give the impression of being irrational, the outcome
is uncertain. However, if we consider that Russia’s economical position is weak
and that there are enough people around Putin who realize this, the following
conclusion becomes more natural:
USAs and
EU’s choice to use economical weapons instead of the military, combined with
the fact the Russian elite understands the country’s situation, will most
likely disarm the current crisis.
Here in
Sweden, we don’t want a Russia that threatens neighboring countries. This means
that a positive development of the Ukraine crises is essential for us.
The only
thing we in Sweden can do as politicians, businessmen, and citizens is to
develop our different relationships with a vulnerable Ukraine, so that they see
the possibilities that a continued integration with Europe gives. This builds a
shared future.
I don’t
think it matters a great deal if we in Sweden move a few JAS airplanes to
Gotland. On the other hand, if Swedish companies were to develop business
relations with Ukraine now, especially in the Russian speaking areas, we can
contribute in a way that can make a difference. Additionally, it can be done on good commercial terms.
We
businessmen depend on a functioning world. If we were to consider our
purchases, research and development, production, and sales now; and establish
or improve contacts with Ukraine, we can contribute to stability. Sometimes you
have to go against the stream. The old reflex to pull back when the media
reports about unrest needs to be challenged this time.
Dan
Olofsson
Entrepreneur