Ford Motor Co Chief Executive Alan Mulally found himself in a rather strange situation this week.
The head of Russia’s oil pipeline monopoly Transneft, which carries over 10 percent of the world’s oil supply to market, takes a charitable view of Russia’s oil output growth. At a time when oil prices are on the slide, and the OPEC group of oil producing nations is cutting production, he thinks energy-rich Russia must keep pumping more to help the world’s less fortunate consuming nations and their economies.
The Kremlin has been promising for years to root out corruption from Russia’s bureaucracy. President Dmitry Medvedev has vowed to redouble these efforts. In June, the newly elected president’s administration presented him with new anti-corruption legislation and a plan to clean up the judiciary.
Mikhail Slobodin’s Integrated Energy Systems, Russia’s largest private electricity investor, works in a tough industry: Prices for gas are rising, prices for coal are rising more. Russia’s growing economy needs power, and IES has heavy obligations to build new stations at a time when construction costs are soaring and credit is tight. Government price regulation leaves little room for profit.
As Russia’s acquisitive corporations have consolidated their positions at home, their ambitions have spread to other fast growing, often risky and untried emerging markets. First they hit the countries of the former Soviet Union, which many Russian businessmen still view as their backyard, and more recently, have expanded in other emerging markets in Asia and Africa. Particularly hospitable have been the old Cold War allies of the Soviet Union, as Russian mobile phone operator Vimpelcom found when it made its first step in Asia by entering a joint venture in Vietnam.
Soaring oil prices have helped make Russia rich, but the flood of petrodollars means Russians face double digit price inflation. Dmitry Pankin, Russia’s deputy finance minister, sees a trade off in a recent market selloff: Russian companies might have trouble raising capital, but billions of dollars in capital outflows may be just the thing to help cool inflation.
Russia’s Finance Ministry and central bank have been put on the defensive for investing the national reserves in U.S. mortgage agency debt. Deputy Finance Minister Dmitry Pankin tells the Reuters Russia Investment Summit that Fannie Mae and Freddie Mac were propping up Russia’s finances, not the other way around.