Europeans Still Struggle to Understand Logic of Decision-Making in Russia

Russian business and the Russian authorities will be increasingly seen in Europe as elements of an alien culture with an unclear decision-making mechanism. The authorities disregard development forms and ideas that could help advance the country. There are obvious problems in Russia due to the declining pace of economic development and unresolved social problems.

Will the ongoing inspections of NGOs discredit these organizations among the public as the authorities hope, or will they discredit the authorities who ordered these unprecedented inspections?

It could go either way. This is just another campaign. The Western public views this as a negative side of the Russian authorities, as one could see during Putin’s visit to Europe. As for Russian society, it is mostly indifferent to the problems of these NGOs. A considerable part of the society is suspicious of NGOs just like the authorities, and believes that accepting foreign money discredits them. But some people see these inspections as an attack on civil liberties and civil society as a whole. I can’t cite the precise percentage, but conservatives represent a very large part of society. I think the majority of people don’t care, a smaller part approves these inspections, and a small minority is critical.

Has the authorities’ NGO policy affected your organization?

Inspections of the Russkiy Mir Foundation, which publishes Russkiy Mir magazine, are regularly conducted by all kinds of agencies, from financial auditors to the Audit Chamber. We usually know about these inspections in advance because they are planned audits.

How will the inspections of foreign NGOs, many of which are human rights organizations, affect the image of the Russian authorities? Will this change the attitude of the politically engaged segment of Russian society to the government?

Yes, certainly. The rift between that part of society and the authorities will widen. I think the authorities are making a mistake by alienating the liberal part of society. It could propose practical ideas that the authorities could have used in constructive cooperation with that very same segment of society to bolster the country’s development. Even if the electoral majority is conservative, one can still rely on it to achieve good results at elections with relatively honest methods. But the authorities disregard other development forms and ideas that could help advance the country. There are obvious problems in Russia due to the declining pace of economic development and unresolved social problems.

Is there a connection between visits to the St. Petersburg office of the Konrad Adenauer Foundation and the Moscow office of the Friedrich Ebert Foundation, during which computers and documents were seized, and Angela Merkel’s position on Cyprus?

No, I don’t think so. The Cyprus situation is part of a general chill in relations with Europe and the West in general. Our cooperation is rapidly narrowing to the spheres where neither side can afford not to cooperate. An increasing number of social and economic issues are being purged from the cooperation agenda, while they should be handled in a comprehensive and pragmatic manner based on international cooperation at various levels.

How can a pragmatic attitude in relations with Europe be fostered? Should we begin with the economy, or divide the focus between social and legal issues and economic cooperation?

A focus on the economy would leave a very small number of areas where we can cooperate with at least a degree of mutual understanding. Simply put, there are no humanitarian values in the business of selling energy. As for possible European investment in Russia or the purchase of European assets by Russian businesses, neither is possible without at least a degree of mutual understanding. Europeans still struggle to understand the culture and logic of decision-making in Russia. The Russian authorities’ managerial culture and sentiments are becoming increasingly alien to Europeans, who are subsequently growing wary of Russian investment in their countries. The number of investigations into Russian business will grow, such as the antimonopoly investigation of Gazprom or the refusal to allow Russian business to buy assets in Europe. Russian business and the Russian authorities will be increasingly seen in Europe as elements of an alien culture with an unclear decision-making mechanism. The actions of Russian partners are unpredictable to Europeans.

I would say that the absence of an independent judicial system, as it is understood in Europe, is the most negative factor influencing the investment climate in Russia. Other factors include insufficient protection of property rights and sudden rule changes. The latter is perhaps a more important factor, though it is often overlooked in Russia because we consider such rule changes to be normal practice. Our officials can send a larger bill to leaseholders in February, claiming that the rate had been raised back in January. Or they can order a kiosk with development plans for years into the future to be demolished because it does not meet architectural requirements.

The Russian authorities are preparing a list of 80 areas in which foreign companies are prohibited from participating in tenders for state purchase contracts, even though Russia is now a member of the World Trade Organization. This work is expected to be completed within several weeks without any discussions with or notification of foreign partners and businesses working in these spheres. Europeans regard this as totally absurd. It will be very difficult to find a compromise in this case. We should probably go back to the situation of the early 2000s, when we were developing dialogue with Europe and our cooperation seemed to have a bright future. If we had a proper attitude to business and the investment climate, Europeans could have closed their eyes to the fact that democracy in Russia is different from democracy in Europe. But it is impossible to work with an unpredictable partner who changes the rules of the game retroactively, when owners cannot hope to be able to protect their interests in a court. This is when accusations of human rights violations are added to other complaints.

Can this become a reason for once again postponing the introduction of visa free travel?

Yes, I believe that this will complicate negotiations on visa free travel with Europe, because Russia above all wants this to be approved for the holders of official or service passports. But these people are associated in Europe with the adoption of the decisions I just mentioned, which represent alien business practices, and so Europe is unlikely to waive their visa requirement. Both sides should work out a compromise. In my opinion, the possibility of reaching such a compromise is rapidly diminishing. We should retrace our steps to where we were at least a year ago.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.