Amid President Trump’s apparent change of sight of Russia, Vladmir Putin offered the opportunity for US companies to get involved again in Russia as one of their main exchange coins in peace negotiations, an apparent “concession” to the United States. Putin will fail in this last effort, just as his imperialist military plans stagnated and his economic exaggeration imploded.
“US companies have lost more than $ 300 billion by leaving the market Russian,” Kirill Dmitiev, chief of the Russian sovereign fund and one of Putin’s leading negotiators, referring to over 1,000 major companies from Russia in 2022, after the Ukraine invasion by Putin. “Given these heavy losses, [o retorno] It would be of interest to the US, ”said Dmitiev.
These discussion points were repeated by the US negotiating team, with Secretary of State Marco Rubio, reflecting on the “amazing opportunities that exist to partner with the Russians economically.”
There is only one problem: these “opportunities for economic partnership with Russians” are nonexistent because none of the more than 1,000 companies that have left is anxious to return to Russia or increase their business there.
We know this firsthand, because we help to catalyze the original exodus in 2022. Immediately after the Russian invasion of Ukraine, its Pacific Sovereign neighbor, our team of 50 specialized researchers – with mastery in economics, strategy and global diplomacy in 15 languages - together with a network of 200 wiki style sources in Russia and Europe, began to publish a rating of 1,400 Russian commercial status of global companies.
Working 24 hours a day, 7 days a week, this effort was widely credited with catalyzing the largest business exodus in history. We remain in constant contact with the CEOs of the largest companies in the country, advising them on their Russian responses.
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As a general rule, companies seek to invest where the rule of law exists, not the law of the rulers. No company wants to invest precious capital in Russia while Putin is in power, because he knows he could lose all this investment four years later, with the next election, or perhaps before, given the instability of US-Russian relations.
But even more specifically for Russia, and unlike Dmitiev’s statements that US companies have lost $ 300 billion when it comes out, the Russian market is “Liliputian” to American companies and economically irrelevant.
Even before leaving, most companies did not receive more than 1% of their Russian revenues; And any recipes they lost by leaving Russia were often replaced by large immediate increases in their assessment, as investors reassured the relief of persistent excessive regulatory risks, reputation and exclusive nationalization of operating in Russia.
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No shareholder is crying out for US companies to do business in Russia, just as no CEO is, and especially now, since, as President Trump has recognized, the Russian economy is in free fall with 20%uncontrolled inflation, mass talent escape (over 1 million Russians fled), capital escape worth $ 250 billion and currency reservations decreasing with the hemorrhage of all the sectors.
The only thing Russia has genuine economic value is its natural resources deposits. Perhaps Trump’s negotiating team keep this in mind – but oil wells, gas fields and metal mines require significant investments to be developed, and no American company needs to take the risk of betting on Putin when the US already houses some of the largest unavailable deposits of energy and rare land in the world, all ready to be harvested. As such, Putin needs US investment much more than American companies need Russian natural resources.
No matter what Trump and Putin can say, we are confident that none of the more than 1,000 companies that left Russia is excited to return. With few companies willing and able to invest in Russia, the “amazing opportunities that exist to partner with the Russians economically” are as nonexistent as Putin’s credibility. There are genuine concessions to be conquered from Russians, but significant opportunities for US businesses are not among them.
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- Jeffrey Sonnenfeld is Professor Lester Crown in Management Practice and Senior Associate Rector of the Yale School of Management. Steven Tian is the research director of Yale Chief Executive Leadership Institute.
- The opinions expressed in Fortune.com comments are exclusively the opinions of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
Article Originally published in Fortune
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