Paul Goncharoff a US citizen, who has been working in financial services, mining and energy in Russia and internationally for over 40 years participates in this program.
Paul came to be involved in Russia ‘by accident' he says. "There was the 1998 financial crash in Russia, and I was asked shortly after that happened to take over the financial activities of AIG, the American International Group, which I did for a number of years. That brought me very closely into the [Russian] financial community."
Paul says that there has always been an anti-Russians sentiment, "It's always been there, and has been going up and down, like an oscilloscope, for different reasons." Host John Harrison describes how in the 1990s there were planeloads of foreigners just itching to get to Moscow and start making money. Paul agrees: "There was no longer the great communist iron wall. Communism disappeared, it was no longer here. Russia became what America was, and very quickly had to use American and European rules of engagement commercially. Then around 2012, the tenor began to change. Things began to get more strained. …Since then we have seen more and more regulations introduced, which are very burdensome and interfering in free trade…"
As far as possible missed opportunities go, Paul talks not about America but about Americans: "I think Americans are missing out on many opportunities. Putting it nicely, it is like shooting yourself in the foot….The restrictions certainly didn't start on the Russian side. They are a ‘measured response' to existing restrictions, using Mr. Putin's phrase, which I think is correct. If one side takes a certain step, the other takes a corresponding step. It's like a snowball, it keeps gathering amplitude. In the 1990s, planeloads of the American and European businessman were coming into Russia and looking for opportunities and finding them, but now we in America we have said: we can't take advantage let somebody else take advantage; it's the law of unintended consequences."
Host John Harrison brings up the point that despite all the sanctions, US-Russia trade has, in fact, continued quite nicely thank you, but that we see EU-Russia trade being hit very seriously. Paul answers that there are large ongoing US businesses here which are largely unaffected. Caterpillar, for example, has factories in China that produce the same machines with the same quality control, which can be sold to Russia from China, thus avoiding the sanctions. "Yes, Europe is suffering significantly because of the mid-market sectors that have been pretty much forced out. That's the cheeses, the wines, the this and that. Turkey has also been badly hit, not that Turkey is in the EU, but it's part of a similar grouping, let's call it NATO."
"In the financial sector, you can also see America losing out, in particular on the bond market, where you see in Europe and in Japan rates of return of half a percent or even less… I see the present situation taking the opportunity away from American investors to buy into Russian bonds, both corporate and government bonds, where the rate of return is at least reasonable because there are certain blockages in place as to how you move money now."
Paul stresses the present situation not only affects business transactions it also affects perceptions. "It's alarming for me as an American, somebody who speaks Russian and yet somebody who thinks in English, to see the Incredible spin that Russia is being given in the United States; everything from the hordes of hackers to electing our president, you know it's absurd."
"The financial restrictions are to a certain extent backfiring. They have unintended consequences and are forcing Russia; which does feel the consequences of sanctions, and in order to lessen that pain and also to continue on a growth curve it has to find other partners, be it Saudi Arabia, Iran, be it deepening relations with India and China, with Japan, which has always been the American aircraft carrier in the Pacific, since the ends of the Second World War. Things are changing…"
Paul hopes that in time, America's attitude towards Russia will change. "America should be a partner and a very viable partner to do business with Russia….What has remained of the ‘Go-Go' years, the 1990s and the first decade of the 2000s, now have become a part of the business culture of Russia. In many ways, since I am involved in governance and transparency, Russian companies, although they don't get credit for it in the press, are much more accountable and internally responsible than many of their western counterparts. …Countries don't change on a financial quarter, they change in decades. This process has been going on for more than two decades. The fruits are now being seen and I'm sorry to have to say, that both the United States and Europe, now that the playing field is somewhat equal, in terms of concepts and perceptions, have decided to put a stop on the whole exercise."
To the question of whether the present situation will lead to war, Paul says: "Let's take a step back. What are financial sanctions? Throughout history they have always been a prelude to war. Do we want this? That's the question. Also, I've seen war, and many of my countrymen have not, except those who have served, and never have we ever seen a war in our lifetime on the territory of our own country. Europe has. Russia has. There is a different perception of that reality. It is a very terminal and finite reality. It's appreciated here. I really hope that we appreciate it in America as much."
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