Economy
Russia Back in Play? Lessons from business in 1990’s Russia
March 14, 2025
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Daniel Satinsky
Former President of the Board, US-Russia Chamber of Commerce of New England, participant in three American-Russian joint ventures, former consultant to American companies entering Russian market, author of Creating the Post-Soviet Russian Market Economy: Through American Eyes.
Considering the evolution of the Russian regime and profound deterioration in Russian-American relations following the war in Ukraine, business consultant and author, Daniel Satinsky expresses skepticism regarding the comeback of American business to Russia
US – Russia economic and business relations are inextricably entwined with politics. As soon as the Trump – Putin dialogue began, there was speculation in The New York Times, the Financial Times, and other outlets about re-integration of Russia into the world economy and re-entry of US business in Russia.
The prospect of major economic opportunities in Russia was part of the February 2025 Riyad, Saudi Arabia meeting between the two countries, dangled by the Russian government through Kirill Dmitriev, CEO of the Russian Direct Investment Fund. Rumors around Washington, DC, are that major law firms are getting requests from multinationals to do risk assessments for going back to Russia.
The echoes of international business entry into post-Soviet Russia in the Bush –Yeltsin era are inescapable, but bear examination as prelude to understanding the current conditions and nature of business opportunities in Russia.
An examination of business opportunities starts by ignoring the moral taint of Russia’s invasion of Ukraine and its internal suppression of dissent and democracy. It also involves a leap of faith to believe that sanctions can be easily or quickly dismantled. Those considerations aside, from a purely business environment perspective, it will be very difficult for most American businesses to engage with the Russian market. The previous reliance on the US and Europe as the source of knowledge and as aspirational model societies has passed.
Market Opportunities Galore in 1990s Russia
When Boris Yeltsin and the group of reformers around him ushered in the creation of a market economy in post-Soviet Russia, they turned to the US and Europe for the skills and knowledge they lacked to create such an economy in Russia. Business people experienced a historically unique period as witnessed in my interviews with businesspeople active in those years and through my own personal experience. (See The Satinsky Archive at The Russia Program, George Washington University).
The prospect of major economic opportunities in Russia was part of the February 2025 Riyad, Saudi Arabia meeting between the two countries, dangled by the Russian government through Kirill Dmitriev, CEO of the Russian Direct Investment Fund. Rumors around Washington, DC, are that major law firms are getting requests from multinationals to do risk assessments for going back to Russia.
The echoes of international business entry into post-Soviet Russia in the Bush –Yeltsin era are inescapable, but bear examination as prelude to understanding the current conditions and nature of business opportunities in Russia.
An examination of business opportunities starts by ignoring the moral taint of Russia’s invasion of Ukraine and its internal suppression of dissent and democracy. It also involves a leap of faith to believe that sanctions can be easily or quickly dismantled. Those considerations aside, from a purely business environment perspective, it will be very difficult for most American businesses to engage with the Russian market. The previous reliance on the US and Europe as the source of knowledge and as aspirational model societies has passed.
Market Opportunities Galore in 1990s Russia
When Boris Yeltsin and the group of reformers around him ushered in the creation of a market economy in post-Soviet Russia, they turned to the US and Europe for the skills and knowledge they lacked to create such an economy in Russia. Business people experienced a historically unique period as witnessed in my interviews with businesspeople active in those years and through my own personal experience. (See The Satinsky Archive at The Russia Program, George Washington University).
“Russia in the 1990s had a very weak central government without the experience and skills necessary to create and manage the type of capitalist economy based on private property that they desired to construct.”
The first McDonald's restaurant opened on Moscow's Pushkin Square on 31 January 1990. Source: Wiki Commons
The reformers turned to Western consultants, lawyers, and businesspeople for advice and assistance.
American advisors shaped the voucher privatization of 15,000 Soviet enterprises; USAID-funded advisors set up the first centralized, automated stock exchange; American entrepreneurs created the residential real estate sector; American and foreign entrepreneurs and multinationals completely changed the restaurant and fast-food sector, brought mobile telephony, established first Internet connections, and created or advised new media in FM radio, TV networks, independent local TV stations. Americans created investment banks, private equity funds, movie theaters, new forms of retail distribution, warehousing, introduced new seeds for Far Eastern farms, and on and on.
Russia in the 1990s had no Russian competitors for Western companies or entrepreneurs in sectors of a modern economy, like real estate, private finance, media business, consumer-oriented retail, fine dining and fast food that did not exist in the Soviet economy. Russians had no experience with market mechanisms. Physical assets, including mineral and energy resources, were completely under-valued and could be acquired for bargain basement prices.
The country had world-class scientific and technical talent that was willing to move to foreign destinations or work in Russia for comparatively low wages. The American Dream was the aspirational lifestyle for many urban Russians of that time, and everything American was commonly considered to be the best.
Russia looked to the US and Western Europe for skills necessary to modernize and compete in the world, repeating a pattern established by Peter the Great’s borrowing of European skills and technology to modernize Russia, repeated again during Stalin’s industrialization. Russians are fast learners and rapidly assimilated Western business skills. As the new Russian elites mastered business and administrative skills, the hardship and turmoil of the 1990s, fueled growing disillusionment among the Russian people. Many came to see the West’s approach to Russia as patronizing and stopped idealizing the American lifestyle and values. A large number of those who still held those values fled Russia in the wake of the 2022 invasion of Ukraine. The window to the West began to close in the late 1990s and slammed shut in 2022.
World of Opposites in 2025
Evaluating the potential for American and multinational re-entry into Russia requires a sober analysis of the completely different current characteristics of the Russian market in contrast to the 1990s when fortunes were made and lost by entrepreneurs willing to take business and personal risks, as well as by multinationals who faced very weak domestic competitors in Russia. The situation on all fronts is quite different today.
In 2025, Russia has a strong central government with an established regulatory framework for its own market economy that will not be dictated to by foreigners. It has competitive private companies and state enterprises with their own brands, in contrast to the green fields markets of the 1990s. This is not to mention the competition from increasingly strong and price-competitive Chinese companies. The flexibility of this market economy and the skill of Russian private business working in conjunction with the Russian state have enabled Russia to avoid most of the dire consequences forecast from sanctions.
In contrast to the 1990s, physical assets are not undervalued, and foreigners may in fact have to pay a premium to acquire them. Russian consumers are discerning, carefully assessing price and value. Intellectual talent is in high demand within Russia.
American advisors shaped the voucher privatization of 15,000 Soviet enterprises; USAID-funded advisors set up the first centralized, automated stock exchange; American entrepreneurs created the residential real estate sector; American and foreign entrepreneurs and multinationals completely changed the restaurant and fast-food sector, brought mobile telephony, established first Internet connections, and created or advised new media in FM radio, TV networks, independent local TV stations. Americans created investment banks, private equity funds, movie theaters, new forms of retail distribution, warehousing, introduced new seeds for Far Eastern farms, and on and on.
Russia in the 1990s had no Russian competitors for Western companies or entrepreneurs in sectors of a modern economy, like real estate, private finance, media business, consumer-oriented retail, fine dining and fast food that did not exist in the Soviet economy. Russians had no experience with market mechanisms. Physical assets, including mineral and energy resources, were completely under-valued and could be acquired for bargain basement prices.
The country had world-class scientific and technical talent that was willing to move to foreign destinations or work in Russia for comparatively low wages. The American Dream was the aspirational lifestyle for many urban Russians of that time, and everything American was commonly considered to be the best.
Russia looked to the US and Western Europe for skills necessary to modernize and compete in the world, repeating a pattern established by Peter the Great’s borrowing of European skills and technology to modernize Russia, repeated again during Stalin’s industrialization. Russians are fast learners and rapidly assimilated Western business skills. As the new Russian elites mastered business and administrative skills, the hardship and turmoil of the 1990s, fueled growing disillusionment among the Russian people. Many came to see the West’s approach to Russia as patronizing and stopped idealizing the American lifestyle and values. A large number of those who still held those values fled Russia in the wake of the 2022 invasion of Ukraine. The window to the West began to close in the late 1990s and slammed shut in 2022.
World of Opposites in 2025
Evaluating the potential for American and multinational re-entry into Russia requires a sober analysis of the completely different current characteristics of the Russian market in contrast to the 1990s when fortunes were made and lost by entrepreneurs willing to take business and personal risks, as well as by multinationals who faced very weak domestic competitors in Russia. The situation on all fronts is quite different today.
In 2025, Russia has a strong central government with an established regulatory framework for its own market economy that will not be dictated to by foreigners. It has competitive private companies and state enterprises with their own brands, in contrast to the green fields markets of the 1990s. This is not to mention the competition from increasingly strong and price-competitive Chinese companies. The flexibility of this market economy and the skill of Russian private business working in conjunction with the Russian state have enabled Russia to avoid most of the dire consequences forecast from sanctions.
In contrast to the 1990s, physical assets are not undervalued, and foreigners may in fact have to pay a premium to acquire them. Russian consumers are discerning, carefully assessing price and value. Intellectual talent is in high demand within Russia.
“Given the massive capital losses foreign investors suffered in Russia following the 2022 invasion, subsequent Western sanctions, and Russian legislation disadvantaging foreign-owned companies, the risk profile for direct investment remains extremely high.”
Vkusno i tochka ("Tasty, period") is a Russian fast food chain based mostly in former McDonald's restaurants and serving rebranded McDonald's items. McDonald's pulled out of Russia after the war started. The first Vkusno i tochka restaurants were opened on June 12, 2022. Source: VK
The potential rewards are limited by the existence of strong competitors already in the Russian market.
Over at least the last ten years, Russian politicians and intellectuals have constructed a world view and ideology of a distinct Russian civilization with conservative values defending itself against the incursion of aggressive Western imperialism, led by the US. The alliance with China rests upon their mutual interest in constructing a new multi-polar world order in opposition to the neo-liberal, US-dominated one. This involves constructing new supply chains, trade patterns, logistics and infrastructure, as well as establishing new business partnerships, along with efforts to replace the dollar as the dominant currency for trade.
The years of Russian state propaganda portraying the US as Russia’s enemy have created a strongly negative image of Americans that is mirrored by the American popular view of Russians as the enemy. These mutual perceptions create grave problems for developing business in Russia, not to mention difficulties arising from moral objections from American shareholders, media, and a section of the public who may view business in Russia as anathema.
Russian authorities may offer some large-scale, flagship business projects as enticement for a limited number of US companies as part of political negotiations, but such projects will most likely either have only a symbolic significance or will benefit only a specific narrow individual interest. Actual engagement in the Russian market for most companies is unlikely except for those who might operate on the margins trading commodities. Market opportunities for US companies in Russia will be difficult to find in sharp contrast to the gravy days of the early post-Soviet years.
Over at least the last ten years, Russian politicians and intellectuals have constructed a world view and ideology of a distinct Russian civilization with conservative values defending itself against the incursion of aggressive Western imperialism, led by the US. The alliance with China rests upon their mutual interest in constructing a new multi-polar world order in opposition to the neo-liberal, US-dominated one. This involves constructing new supply chains, trade patterns, logistics and infrastructure, as well as establishing new business partnerships, along with efforts to replace the dollar as the dominant currency for trade.
The years of Russian state propaganda portraying the US as Russia’s enemy have created a strongly negative image of Americans that is mirrored by the American popular view of Russians as the enemy. These mutual perceptions create grave problems for developing business in Russia, not to mention difficulties arising from moral objections from American shareholders, media, and a section of the public who may view business in Russia as anathema.
Russian authorities may offer some large-scale, flagship business projects as enticement for a limited number of US companies as part of political negotiations, but such projects will most likely either have only a symbolic significance or will benefit only a specific narrow individual interest. Actual engagement in the Russian market for most companies is unlikely except for those who might operate on the margins trading commodities. Market opportunities for US companies in Russia will be difficult to find in sharp contrast to the gravy days of the early post-Soviet years.
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