
Investing in Russia? Better hire body guards and hunker down  - dwynings
http://venturebeat.com/2010/06/06/investing-in-russia-hire-body-guards-and-hunker-down/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Venturebeat+%28VentureBeat%29
======
jsn
Heh, Skolkovo is on Hacker News now. The author paints quite a grim picture
there; the reality is probably even worse, though.

Just to give you some idea about it: one of the main selling points for
Skolkovo, for potential russian players, is the official statement that
Skolkovo will have "its own legal and tax regime, and even its own police".
Why? Because the situation with legal and tax regime here in Russia is
obviously too bad for whatever they want to do in Skolkovo, and because the
police [and other law and regulations enforcement institutes] are way too
corrupted to provide the necessary business climate.

Basically, it's now officially acknowledged that the general situation with
these things in Russia is broken beyond repair, there is neither hope nor
effort to fix it, and now they are going to try to build something less ugly
specifically for Skolkovo.

Needless to say, I can't imagine it working out as planned.

~~~
noilly
Isn't this basically an attempt at Hong Kong/SEZ/Charter City type
development. Not necessarily doomed to failure?

~~~
jsn
It's definitely not Hong Kong and not a charter city -- whatever they mean by
"their own something something", it definitely doesn't imply any comparable
levels of autonomy.

So yes, it's basically a SEZ, I suppose. It could as well work if the main
problem was the tax burden -- which, unfortunately, it's not. Taxes didn't
kill e.g. Magnitsky or make e.g. Chichvarkin lose his business and flee the
country.

------
siculars
You could not pay me enough to invest in Russia as she is situated today. I
would need to see irrefutable, verifiable proof that things are changing for
the better before I would consider sending even one of my hard earned dollars
there.

As far as I'm concerned, when it comes to Russia: The King is dead. Long live
the King.

~~~
asdflkj
There are better things to invest in than Russia, but where does the "could
not pay me enough" attitude come from? There's nothing wrong with Russia right
now that hasn't been as wrong or more wrong in the 90s, when there was much
less meanness in the West toward Russia.

~~~
raquo
There was more hope back then that Russia would improve, because it then was
in transition from USSR, broken economics, low oil prices, budget deficits,
you know.

Since then oil price rose from $20 to $150, and... nothing changed. Those who
were gangsters in the 90-s are now the government. They do their business
accordingly.

~~~
asdflkj
Well, quality of life for the average Russian changed, not that anyone cares
about that. And those who were gangsters in the the 90s are not just "now" in
government. I'll repeat myself: nothing is wrong now that wasn't wrong before.
Why all this emphasis on the "now", except that The Economist likes this kind
of talk?

You are a flawed individual now. How does that sound? I mean it's technically
true that you are flawed in some way, as we all are, in the present moment.
But clearly the sentence carries an attitude beyond the literal meaning. I am
disappointed to see this kind of insidious rhetoric get support on HN.

~~~
raquo
> nothing is wrong now that wasn't wrong before

Only technically true, if at all. Ultimate corruption, political monopoly, no
security of any kind for _20 years_ and no signs of improvement give me no
hope whatsoever that the next 20 years will be any better.

I'm pretty sure we will be sliding down the Nigeria way sooner or later, and
it's really sad.

------
mustpax
_Late last year, Browder’s attorney in Russia died after apparently being
tortured while being held in jail by Russian authorities._

For more on this story and on how doing business in Russia can be hazardous to
your health:

[http://www.foreignpolicy.com/articles/2009/12/22/they_killed...](http://www.foreignpolicy.com/articles/2009/12/22/they_killed_my_lawyer)

~~~
Rod
Some more links on Bill Browder:

Bill Browder at Stanford GSB (2009)
<http://www.youtube.com/watch?v=84MsRuC-1l8>

An investment gets trapped in Kremlin’s vise (2008)
<http://www.nytimes.com/2008/07/24/world/europe/24kremlin.htm>

The savage irony of William Browder (2007)
[http://www.robertamsterdam.com/2007/06/the_savage_irony_of_w...](http://www.robertamsterdam.com/2007/06/the_savage_irony_of_william_br.htm)

Bill Browder's Russian Odyssey (2006)
[http://www.gsb.stanford.edu/news/bmag/sbsm0611/feature_browd...](http://www.gsb.stanford.edu/news/bmag/sbsm0611/feature_browder.html)

------
SkyMarshal
IANAE, but I get the distinct impression that the Russian mob has a hand in
_everything_ in Russia, and completely controls some things.

Any foreign venture that succeeds there will inevitably end up, at best,
paying the mob protection money, and at worst having their company stolen as
Bill Broward discovered (see link in article).

On the risk management scale, the probably of losses to the mob is P(A) = 1.0.
The only question left is, how much.

~~~
rjurney
The mob was replaced by the FSB - formerly the KGB. Which is now the mob, but
also the Kremlin. So yeah.

~~~
rdtsc
The mob wasn't replaced by FSB, it was the FSB from the start, after Soviet
Union collapsed.

ex-KGB agents were in the most favorable position to participate in the power
and asset grab after the collapse. They knew how things were run, they had the
connections, they also were most educated and most trained. They sort of
represented an elite class of individuals selected, educated and trained
better than the rest.

When things fell apart a lot of them scattered looking to grab whatever as
available. Political and patriotic allegiance to the party has become a
running joke since after the 60s. Most of them had absolutely no problem
switching practically overnight from staunch supporters of communism to brutal
capitalists.

~~~
disposable
> _The mob wasn't replaced by FSB, it was the FSB from the start_

Back in late 80s and early 90s there was a mod and there was a FSB, with
former comprised predominantly of criminals and former athletes. I am sure you
are well aware of that if you lived in Russia at that time.

~~~
rdtsc
Yes. But we are talking about the high level mobsters. Those that grabbed
whole enterprises and were running multi-million dollar racket jobs, not local
street gangs.

Some people think of local street gangs because they are just more visible, I
am thinking of mobsters who were running the whole country. There were often
connections between the two but both were operating at different scales and in
different domains.

------
jrockway
Russia didn't work out for these guys either:
<http://en.wikipedia.org/wiki/Long-Term_Capital_Management>

