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Russia laid bear…

Morning, Ethical Corp world. I’m Peter Davis, and I’m the magazine’s political editor, which means that I try to put some of the CR issues that are of concern into the wider social and political context

Anyway, I was thumbing through The Economist earlier in the week, and came across an advert for a conference they are running abount investment in Russia – trumpeting the ‘modern business environment’ and the country’s vast natural resources. All true of course.

However, what they neglected to mention were the rather obvious downsides of doing business in the Rodina. For a start, although central Moscow, and a few other locations like St Petersburg and Nizhny Novgorod might have a modern business infrastructure, the rest of the country certainly does not! Indeed, go just a couple of hundred miles outside Moscow, and it’s as if you’ve gone back to the 12th century.

However, many developing countries are like that. The real problem, from a CR perspective, is what compromises doing business in Russia requires on issues like corporate governance. The apparent attitude of the Kremlin at present appears unlikely to render the situation any easier. I’ve just written a piece for the next edition of Ethical Corporation about Shell’s travails in Sakhalin. Shell has gone through all the right hoops in Russia, but still faces the very real prospect that their huge project will have its ground rules changed half way through.

The Russian authorities’ pretext for stalling the project is environmental, and even Shell admits that the environment has been a big challenge for the project. However, the real reason for the Kremlin’s move is that they want a bigger slice of hte Sakhalin action. From a CR point-of-view, how are companies like Shell, who are commited to good governance to respond to this sort of behaviour by host governments?

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