Russia: Surprising on the upside
Click to enlarge the image. Drawing by Niyaz Karim
Like an analyst giving a share tip, I think that I should start by admitting that, despite being an Englishman, I am “invested” in Russia. I have lived in the country for almost 19 years, work here and even have a Russian wife.
Nevertheless, having given that caveat emptor, let me come out fighting and state that Russia is actually a well kept investment secret and represents a tremendous opportunity for those with the vision to see beyond the stereotypes and short term challenges. In short I think the country and its economy will surprise on the upside.
There is a fine tradition of pessimism in Russia and its one that has stood the test of time – frankly for much of the country’s history it has paid to be pessimistic – after all, the worst that can happen to a pessimist is that you are proved to have been right all along!
So it is not surprising that the increasingly wealthy and middle class Russians cannot help but observe that “it cannot last” that “things are only getting worse” and that it is “only a matter of time before the country collapses”.
In short, Russians are often subscribers to the “glass half empty” view on life – in fact they would typically conclude that not only is the glass half empty, but suspect that the contents would probably kill you if you consumed them and note that someone will probably steal the glass before you get the chance to take a drink. So if the Russians are so pessimistic, why am I optimistic?
Well, after waiting for 19 years for the country to duly fall apart, I am convinced that Russia has fundamentally changed for the better and that it will continue to progress. This is not to say that there are not challenges ahead. There are always challenges ahead and progress is never even and uneventful, least of all in Russia, but I am more confident that Russia is heading in the right direction.
There are many things that contribute to that confidence, but let me pick out a couple of things that have had positive impact on my mood over the last few months; the transformation of summertime in Moscow and the Universiade in Kazan.
A little like the proverbial frog in the pot of gradually boiling water, as a long time resident of Moscow it is sometimes difficult to see that the city is undergoing fundamental change, but this summer the city has finally started to look and feel like a modern European capital.
From the creation of new parks, the program of pedestrianisation, the introduction of effective parking restrictions to combat congestion, the new city bike scheme and the holding of the first Moscow Flower Show, Moscow has been transformed this summer – into a cool city with a thriving sidewalk café culture and an array of summer terraces serving world class cuisine.
The rapid pace of improvement in the city was brought home to me when a colleague, who last visited the city two years ago, was rightly positively “shocked” at the changes wrought to the city since his last visit.
And contrary to the old saw that it’s “just Moscow” that has progressed (those pessimists again!), my experience is that changes are also transforming cities around the country. The most spectacular example of this is perhaps Kazan, which in July hosted the 27th Universiade, or student Olympics.
As usual in Russia, ahead of the games the pessimists were rubbing their hands in an ecstasy of expectation, foretelling an embarrassing catalogue of logistical disasters, poorly prepared, sub-standard, empty stadiums and frustrated spectators and athletes.
In the event, everything about the Universiade was a triumph. From the moment that you arrived at the gleaming new airport terminal and were greeted by a phalanx of the ever helpful, ubiquitous and enthusiastic volunteers, the whole experience was a joy.
The opening and closing ceremonies in the spectacular new 45,000 seat football stadium were only marginally less impressive that those staged in London 2012. Everything was world class, including the warmth of welcome that Kazan provided to the athletes and spectators. This was a new and improved Russia, one that was open, friendly and modern.
Now, for the benefit of the pessimists, things could get worse from here, but with Sochi 2014 up next, I have a feeling that Russia is on a roll and that we are all going to have to get used to Russia surprising on the upside.
David Gray is managing partner of PwC Russia.