By developing relations with Ukraine a shared future can be built

“The Russian economy is weak and is weakened by the crisis. Meanwhile, Swedish companies has an opportunity to help Ukraine in this situation. It builds a shared future.”

This is an opinion piece written by the entrepreneur Dan Olofsson, published in the Swedish finiancial newspaper Dagens Industri on March 6, 2014:

Last year when I took part in The Russia Forum in Moscow (Russia's own version of the World Economic Forum in Davos), I gained one very important insight: the Russian investors preferred to move their capital abroad rather than invest it in Russia.

As a Swede, I was struck by the thought “How is Russia going to attract foreign investors if their own investors don't believe in their own country’s future?”

The explanations given in direct, personal conversations with key persons was an uncertainty regarding in which direction Putin’s leadership is heading, an uncertainty regarding a stable independent legal system, what happens with currency regulation, and so on. In short, the risk that another version of the Soviet dictatorship will be resurrected and that the rules of the game will change suddenly.

Russia has an economical elite, close to Putin, that understands how the world economy works. The GDP in Russia is about 6% of the combined GDP of the USA and the EU. Also, the Russian economy is primarily based on the export of oil and gas, foremost to the EU, which makes the country very vulnerable. If you add the fact that Russia hasn’t been very successful in building other forms of industry, you realize that in the coming years, Russia will depend on the willingness of both Russian and foreign investors to invest in different business areas. Russia cannot develop successfully if it isn’t part of the global market economy.

A further factor is that many Russian investors have become rich very quickly, meaning that they don’t have the industrial grounding and the resulting loyalty, which characterizes many Swedish companies. Their capital is, in other words, more mobile, which is something you notice today around the world where exclusive real estate is sold. This is another thing that adds to Russia's vulnerability.

So when US Secretary of State John Kerry says that they will isolate Russia politically, economically, and diplomatically if Russia doesn’t tone down the threats against Ukraine, this is a devastating scenario for Russia’s future development. A decrease in EU import of oil and gas combined with the situation where no one wants to invest, will basically close down Russian business.

So how will Russia act? Obviously, this is something that no outsider can know. But with a strong leader like Putin that can give the impression of being irrational, the outcome is uncertain. However, if we consider that Russia’s economical position is weak and that there are enough people around Putin who realize this, the following conclusion becomes more natural: 

USAs and EU’s choice to use economical weapons instead of the military, combined with the fact the Russian elite understands the country's situation, will most likely disarm the current crisis.

Here in Sweden, we don’t want a Russia that threatens neighboring countries. This means that a positive development of the Ukraine crises is essential for us.

The only thing we in Sweden can do as politicians, businessmen, and citizens is to develop our different relationships with a vulnerable Ukraine, so that they see the possibilities that a continued integration with Europe gives. This builds a shared future.

I don’t think it matters a great deal if we in Sweden move a few JAS airplanes to Gotland. On the other hand, if Swedish companies were to develop business relations with Ukraine now, especially in the Russian speaking areas, we can contribute in a way that can make a difference. Additionally, it can be done on good commercial terms.

We businessmen depend on a functioning world. If we were to consider our purchases, research and development, production, and sales now; and establish or improve contacts with Ukraine, we can contribute to stability. Sometimes you have to go against the stream. The old reflex to pull back when the media reports about unrest needs to be challenged this time.

Dan Olofsson
Entrepreneur