Firms show caution in Russian investing

Russian President Dmitry Medvedev and U.S. President Barack Obama arrive to deliver a speech after the signature of the Joint Understanding on Strategic Arms Reduction during a joint press conference at the Kremlin, in Moscow, Russia.

TEXT OF STORY

Kai Ryssdal: The big news out of President Obama's visit to Russia today was about nuclear weapons. He and Russian President Dmitry Medvedev agreed to cut nuclear arsenals by a third. And there was a big formal signing ceremony at the Kremlin.

But there's more to this summit than meets the eye. The list of people traveling with the president could have been drawn straight from the pages of the Fortune 500. Executives from Boeing, and John Deere and Pepsi are just some of those along for the ride as Marketplace's Jeremy Hobson reports.


JEREMY HOBSON: It's been almost 18 years since the collapse of the Soviet Union. And still, Russia only accounts for about 1 percent of U.S. trade. Angela Stent is director of the Center for Eurasian, Russian and Eastern European Studies at Georgetown University.

ANGELA STENT: People always thought after the collapse of communism there would be a major breakthrough, that there would be huge opportunities for U.S. business there, and it hasn't quite worked out like that.

Stent says even today, U.S. investors are wary.

STENT: Because there really is no rule of law in Russia, U.S. companies have questions about how safe their investments are and whether the agreements they make with Russian companies will be honored.

Just look at IKEA. The Swedish retailer said last month that it is canceling all further investment in Russia, citing corruption and demand for bribes. But today, there's news that Boeing will announce a partnership with a Russian titanium maker and Pepsi is boosting investment by a third.
Jeff Barnett is with the U.S.-Russia Business Council. He says trade ties could flourish if political ties actually warm up.

JEFF BARNETT: A lot of companies realize this is a risky market, but it's also a market in which they can realize higher returns.

Barnett sees the U.S. commercial relationship with China as the model. The economic ties are so strong, they've been able to overshadow political squabbles time and again.

I'm Jeremy Hobson for Marketplace

About the author

Jeremy Hobson is host of Marketplace Morning Report, where he looks at business news from a global perspective to prepare listeners for the day ahead.

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