Sunday, June 13, 2010

Window on Eurasia: Ever More Russian Businessmen Choosing to Leave Russia Permanently

Paul Goble

Staunton, June 13 – Not only are ever more Russian businessmen sending their capital and their children abroad, but an increasing number are choosing to leave the Russian Federation themselves, a development that will add to Moscow’s current difficulties in overcoming the current economic crisis and promoting the development of the country.
Two weeks ago, an Internet user challenged President Dmitry Medvedev by saying that “85 percent of Russian businessmen are ‘sitting on their suitcases,’” a description that the Russian leader suggested was untrue but one that Moscow’s “New Times” decided to investigate (
What the independent weekly found shows that if the situation is not as dire as the blogger suggested, it is far worse that Medvedev and the powers that be appear to believe and reflects the view of many working in Russian business that it is better to sell and leave than to deal with corruption and political controls.
Olga Krystanovskaya, a specialist on elites at the Academy of Sciences Institute of Sociology, told the weekly that “Russian entrepreneurs really are seeking to send a significant portion of their capital out of the country,” but she said “this does not mean” that they all are themselves ready to leave.
Many recognize, she continued, that they would be forced to start over under very different conditions and thus are willing to remain and try to cope with the conditions of the life of a businessman in Russia, however much they dislike those conditions and however much they seek to insure themselves by sending capital abroad.
Nikolay Kovarsky, the vice president of the 2015 Club, for his part, told “New Times” that “no one knows the exact figure of those now ‘sitting on their suitcase’, whether it is 80 percent or 50 or 20, but the problem certainly exists.” And it is having an impact even on those who do not leave.
“Many [Russian] entrepreneurs,” he continued, “are beginning to reduce their operations in Russia, saving themselves for better times or even selling their businesses altogether.” There is even what one might call “an unnatural change of generations,” one that points to even more problems ahead.
“Before those who have spent 20 difficult years in the race for profit, the [current] crisis has put the question: what next? ‘The situation in the country for entrepreneurs is becoming ever harsher: profits are falling, and administrative pressure is growing,” even though “the logic of business requires constant development.” Many of these, Kovarsky said, do not see a way out.
At the same time, those Russian businessmen in their 40s and 50s, a group too young to retire, are increasingly considering “departure from the country of at least living in two homes – in Russia and somewhere else.” They feel “uncomfortable and insecure” both in their business and personal lives.
And Igor Nikolayev, the head of the strategic analysis department of FBK, said that this decision to live in two places reflects the following calculation: “Businessmen, especially those close to the powers that be understand that nowhere in the world are their such conditions for earning money as here,” even if nowhere are the risks so great.
But at the same time, he added, those businessmen without connections at the highest levels are increasingly fearful of what could happen to them in the near term and thus they are quite prepared to flee to the West, however much money they may have made or may be making in Russia now.
Those businessmen who have decided to leave often choose to go to Western Europe or Israel, “New Times” reports. And even if they are trying to remain, ever more of them are working to ensure that their children either study or live abroad, as the recent UBS-Campden Research Study found.
But it is clear that Russian businessmen are leaving. According to official Rosstat figures, businessmen form an increasing share of those Russians choosing to emigrate permanently. In 2005, 3.1 percent of all those departing were business people; in 2010, the government statistics office reports, 6.5 percent of those leaving are businessmen.

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