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#3 - JRL 7035
New York Times
January 27, 2003
More Russians Back in Davos, Still Rich but Now 'Respectable'

DAVOS, Switzerland, Jan. 26 The Russians are coming, but quietly. And
that is just how some of them seem to want it to be.

A decade ago, before the financial crisis of 1998 ended the stampede of
Western investors looking for a slice of post-Soviet riches, Russian
executives attending the annual World Economic Forum in this Alpine resort
carved out quite a reputation. They were flashy high-rollers and
hard-partiers, whose tentacles spread to the heights of political and
economic power.

These days, said Anatoly Karachinsky, a Russian software executive, "my
American friends say they look at Russia as a normal country and that's
fine; we are integrated into the world economy."

Mikhail Khodorkovsky, the 39-year-old chief executive of Yukos, Russia's
second-biggest oil producer, said that a decade ago, Davos's night spots
were "all something new" for Russians.

"These days, Moscow is one of the liveliest cities in Europe, and we are
all 10 years older now," said Mr. Khodorkovsky, who is possibly Russia's
richest man. "So anybody who wants to go out and party and have a good time
can do so in Moscow. And they come here for other reasons."

Those reasons, mainly, are to talk and schmooze and convince the world that
after defaulting on its debt in 1998 and bamboozling Western investors,
Russia now has a youthful economic elite that has changed.

But the gates are not wide open to this by-invitation event. In 1996, the
number of Russian participants here reached a high of 76. After the crash
of 1998, it fell to just half that. Since then, it has been climbing back
and reached 52 this year dwarfed by an overwhelming American and Western
European presence among the 2,000-plus participants.

"If we opened the door, we would have about 100 Russian business
participants," Klaus Schwab, the forum's founder, said in an interview.
"But we are very restrictive, and we try to invite only those who have a
good record in terms of corporate governance and so on."

Indeed, the Russian participants both from politics and business were
met this year with a broadside from Amnesty International. "There are human
rights issues that business can't ignore arbitrary detention, appalling
prison conditions, unlawful killings, disappearances, gross violations in
Chechnya and pervasive corruption everywhere," said Irene Khan, Amnesty's

"We are not asking companies to divest from Russia, or disinvest, but to
influence human rights through their own policies and practices," she said.

Naturally, the barons of Russian capitalism are not enthusiastic about such
reminders of a not-too-distant past when so-called oligarchs used political
influence and by Western standards, highly dubious maneuvers to wrest
control of vast slabs of Russia's previously state-owned assets. Mr.
Khodorkovsky, for instance, was reported to have won control of the
multibillion-dollar Yukos company for a relatively modest $159 million loan
to the state. In 1999, he succeeded in muscling Kenneth Dart, an American
billionaire, out of big stakes in Yukos subsidiaries by shifting assets to
offshore subsidiaries.

In several conversations, Russian executives bridled at any hint that the
history of the post-Soviet 1990's has somehow set them apart from the
mainstream of global business. Indeed, they argued, recent developments in
the United States have given them ammunition for a counterattack. With the
accounting scandals at Enron and elsewhere, supposed paragons of American
corporate virtue have fallen from the moral high ground.

"There is much less suspicion than there used to be," Aleksandr E. Lebedev,
a 43-year-old banker, said of the attitude toward Russian business. "It
turned out that some Western countries were not at all better."

And these days, said Ruben Varanian, 34, a prominent financier, Russians
engaged in business "want to be respectable."

That does not mean that they do not party anymore. On Saturday, Mr.
Khodorkovsky had a party for fellow industrialists at one of Davos's
upscale hotels.

A formal $70-per-head dinner here to discuss Europe's ties with Russia was
oversubscribed in what the Russians saw as a sign of growing interest.

Moreover, Russian business seems more assertive in part because it has a
story to tell of economic reform, partly repaid debt and growth far
outpacing that of other European countries or the United States. Big
companies are looking beyond Russian borders to expand.

Furthermore, having made millions, some executives have apparently
concluded that the best way to hang on to their wealth is to draw up rules
of good behavior.

Still, worries remain. "Has Russia dealt with corruption?" Mr. Khodorkovsky
said. "No it hasn't. Is it a problem? Yes, it's a problem.But can it be
said that Russia is the most corrupt country in the world? Not at all.
There are many countries in Europe that are a lot more corrupt than Russia."

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