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Will Business Interests Limit Russia’s Aggression in Ukraine?

By TC Doyle
March 04, 2014 - News
Continued from page 1

On an even larger scale, several tech giants have pledged to support efforts to develop Skolkovo, a community on the edge of Moscow, into a technology hub that could one-day rival Silicon Valley.

In August 2013, the Skolkovo Foundation, which oversees the massive project, announced that it had secured agreements with state and private investors to funnel as much as $15 billion over the next seven years into Skolkovo, according to a report cited in The Moscow Times. Among other tech giants, Nokia, Siemens, Samsung and Cisco Systems have made commitments there. Cisco alone has pledged nearly $1 billion in investment over 10 years, despite ongoing charges of fraud and mismanagement associated with the project.

Unfortunately, corruption in Russia has been a difficult obstacle to work around for western tech companies. In September 2013, for example, three former HP managers were charged in Germany in a corruption investigation over improper payments made to win a $45 million sale of computers to Russia a decade ago, according to Bloomberg Businessweek. (A month before, news reports surfaced that a Microsoft business partner was thought to have provided kickbacks to a government official in exchange for a contract with a state-owned enterprise.)

Despite the malfeasance and high employee turnover, western companies continue to pour more money into the world’s largest nation because the potential for new business there and the quality of engineering talent available is so great.

That talent, by the way, has given rise to a number of organizations that are poised to challenge Western rivals — in Russia for now and outside the country perhaps one day. In Russia, for example, Google is the No. 2 search engine company behind Yandex. Likewise, VKontakte, Odnoklassniki and Moi Mir are the social media sites of choice for young Russians, not Facebook. And instead of Amazon or eBay, more Russians opt for home-grown e-commerce site Ozon, according to the BBC.

Among those already doing business outside the nation’s borders is Kaspersky, which has set up shop in the U.S. in Woburn, Mass. Today the company is one of the fastest growing purveyors of anti-malware technology. Last year alone, it recruited 800 new partners in North America.

Although the recent turmoil in Ukraine threatens the Moscow-based company’s ability to conduct business as usual, many believe Russian will stop short of scuttling the economic momentum is has worked so hard to acquire in recent years. On Monday, for example, the Russian stock market lost 11 percent of its value, prompting the Russian Central Bank to raise interest rates to stave off inflation.

In a blog posted Tuesday, Channelnomics CEO Larry Walsh opined, “Chances are, the way markets reacted shows the business community won’t allow diplomatic and military communities to prevail."

For all our sake, let’s hope Walsh is correct.

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