- The Washington Times - Monday, July 13, 2009

ANALYSIS/OPINION:

Your editorial “Dancing with the bear” (Opinion, Thursday) neglected to mention the differences the United States and Russia have when conducting international business. Russia lacks an independent judiciary and harasses corporations that defy Kremlin rule. Last year, British Petroleum and its Russian partner Alfa-Access-Renova (AAR) sparred over control of their 50-50 joint venture in TNK-BP. AAR sought control of the company from then-BP-backed Chief Executive Robert Dudley. BP’s foreign staff suffered pressure from Russian authorities about abiding labor laws and over work visas and permits. It is hard to believe an international company would want to conduct business in such an unstable environment.

However, Boeing, the largest producer of commercial jetliners and military aircraft in the world, has risked just that. Boeing agreed to a $70-million 50-50 joint venture with Russian-state-owned VSMPO-Avisma, the world’s largest titanium producer, which was the reason Prime Minister Vladimir Putin attended the signing ceremony. Interfax reported that the joint venture will produce titanium forgings for use in the Boeing 787 Dreamliner. In time, Boeing may have to start looking for titanium producers elsewhere.

Russian President Dmitry Medvedev has pledged judicial reform, but the second trial against Mikhail Khodorkovsky, a former oil magnate, highlights the questionable legal proceedings in Russia. Until Russia reforms its judicial system and fosters transparency and compliance with international standards of business, Western companies should step with caution when considering investment there.

KIPP LANHAM

Washington

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