Recently one of my friends came back from Africa. He was not in that part of Africa, where tourists spend big money for taking refuge in the indigenous resorts and exotic tropics, but in that part, which long had no experience of welcoming a white person. And it wasn’t the thirst for adventures that beckoned him there: several Russian businessmen have decided to start mining operations somewhere in Congo.

Actually, they did have plenty of adventures. Two of the Russians were almost gunned down: one for not knowing French, and the other, being mistaken for a Ugandan spy. However, each time they managed to save lives of their colleagues, for a fairly reasonable price, $20.

When they stopped for a night in the only decent hotel of a provincial town, a rat attacked them. They went down to the receptionist to complain. “And what room are you in?” asked an elderly black guy, sitting at the reception desk. “In 216? That rat has been living there for three months already”. The only thing left was to feed the rodent. The rat chilled out, moved to the bathroom and never bothered them again.

There was a lot more the traveler had shared with me. But, listening to his story, I suddenly realized that my friend was carrying out a mission of globalizing Russian capitalism, providing ways to export Russian capital. Missions like this one are not always dramatic. Usually adventures accompany small and medium businesses. Large corporations don’t have such problems like my friend had, but if they do they make others pay for the failure.

The biggest economic event this spring was Gazprom’s capitalization positioned it third on the world list. Actually, there is nothing surprising about it. Having the immense share of the total energy resources under control, Russian companies initially had all everything settled to get to the top of the world ratings. It didn’t happen then, because all these enterprises in course of privatization were dramatically underestimated, which is, too, very logic. Back then it was the common strategy of the liberal reforms in 1990s: to give away the national treasures almost for nothing and to break up the economic potential of the former superpower. It is worth remembering that the Soviet Union was a superpower, and not only politically, but economically as well. Maybe the Soviet economy was as ineffective, as it could possibly have been, but still, it was second largest in the world.

For today’s Russia, regardless all its successes, to reach out for the economic superpower status is as impossible as to reach out from Moscow to the Moon. Capital outflow is typical not only of the U.S., the EU or Japan. South Korea, Brazil, South Africa, Turkey, India are all setting up transnational companies of their own. This factor really does indicate the maturity of Russia’s capitalism.

I am not acting out because money is taken away from the country, the way it is being done is disturbing. Gone are the fun times, when a Russian nouveau riche, jumping out of the plain in London airport, would rush to the first broker he sees, trying to invest the stolen money into any offshore fund. Now it’s not just money being taken away, but capitals being invested. It is done consciously, for strategic purposes. Gazprom systematically buys out companies in the countries of the former Eastern Bloc, then moves on to the West, taking over the transportation system and the distribution networks. Norilsk Nickel and Lukoil acquire enterprises abroad, which could either become their partners or competitors. Automobile manufacturers, having bought a motor plant, are debating if they should move it to Russia or let it stay where it was, just making it a part of their processing chain.

Of course, this new transnational status creates new problems for the Russian corporations. It brings new concerns about the company’s image, need for considering the public opinion, not so much back home, but abroad. This issue remains very poorly settled with us. The Khodorkovsky case has proven, that while we are preoccupied with building image for foreigners, the things at home are getting worse. Well, it takes some time to learn…

Oil treasures of Russia give our companies prospects for global expansion. The trouble is, that in Russia the roads are still impassable, the buildings collapse on the heads of their dwellers, and equipment in most of the plants and factories is worth exhibiting in a museum as an example of the last century technology. No one is going to change the situation, as investments of this kind, in modern terms, are not “attractive”. Having become global players, Russian companies are ready to use all of their competitive advantages in the world market, because they have no time, no concern for their own country, but primarily, because it’s not beneficial for the company to invest in their country’s development.

Western countries became advanced in the capitalist world, because they entered the global market, already being leaders in their field – in the majority of fields, varying from technologies to transport infrastructure, and even ideology. For them, the globalization was a way to support their leadership. For countries on the periphery such success may tern into a disaster. American capitalist might say, “What is good for General Motors, is good for America”. Before taking it, go ahead and ask members of the trade unions at his plants what they think, and results will not be that optimistic. But if you are told, “What is good for Gazprom, is good for Russia”, then no one will even need additional asking.

Boris Kagarlitsky is a Director of The Institute for Globalization Studies.

May 27, 2006