KAI RYSSDAL: Treasury Secretary Henry Paulson’s got a new thing he’s doing. He’s on a tear to increase foreign direct investment in the United States. It’ll probably be something of an uphill fight. Because Americans are notoriously uneasy about foreign firms buying U.S. businesses. The brouhaha over Dubai Ports World is probably the best known example.
Detroit may well be the next target of overseas interest. We’ve told you before about Chrysler probably being sold off by its German parent company. One of the leading bidders is a Canadian parts maker, Magna. Which just yesterday announced it’s taken a billion and a half dollar investment from a Russian tycoon with close ties to the Kremlin. A guy named Oleg Deripaska.
Anders Aslund is a fellow at the Peterson Institute for International Economics in Washington.
Mr. Aslund, welcome to the program.
ANDERS ASLUND: Thank you.
RYSSDAL: Who is Oleg Deripaska.
ASLUND: One of the richest men in Russia. A 39-year-old . . . big businessman . . . and the biggest tycoon in aluminum in Russia. And almost in the world. And also a big owner of automotive companies in Russia.
RYSSDAL: And is that what explains his interest in Magna International, the Canadian car firm — that auto firm he owns in Russia?
ASLUND: Indeed, he owns a lot of automotive factories in Russia. He’s doing pretty well in terms of production, but the products are not very good. He needs better products from the West.
RYSSDAL: What, then, do you suppose would Magna’s interest in him be? They’ve agreed to a $1.5 billion stake in their company from him. Why might they be doing that?
ASLUND: Well, the most obvious reason is to export to Russia. Deripaska controls much of their part of the market in Russia. And Deripaska wants Western technology. And he has tried various means of getting it through joint ventures. But nothing has really worked out. So then he tries by buying a share of a company abroad, instead.
RYSSDAL: Speculation, of course, has centered around Magna and its possible bid for Chrysler, the American and German car company. Do you think Mr. Deripaska wants part of Chrysler? Is that in this bargain at all?
ASLUND: It would make perfect sense. He need a Western company that can help his Russian automotive companies. And Chrysler would fit the bill very well for him. And for Chrysler it would, of course, be good to get wonderful access to the very fast growing Russian market.
RYSSDAL: Why have Russian companies been spreading throughout the world? They’ve been buying foreign corporations for a number of years now.
ASLUND: Well, they have built up splendid businesses pretty much like the American robber barons slightly more than 100 years ago in this country. And commodity prices have been wonderful. And when you earn more money, then of course you want to expand. And where do you expand? You expand abroad.
RYSSDAL: Anders Aslund is a fellow at the Peterson Institute for International Economics in Washington, D.C. He was an economic advisor to the Russian government back in the 1990s. Mr. Aslund, thanks for your time.
ASLUND: My pleasure.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.
You make our
Support nonprofit news you love with a gift today.