The Russian “oligarchs” are business entrepreneurs who emerged under Mikhail Gorbachev as a result of the Privatization program when formerly State-owned enterprises were auctioned off to private purchasers. The term “oligarch” reflects the huge, fast-acquired wealth of some businessmen of the former Soviet Union in 1990s. While there are a dozen or so of these oligarchs, this posting will focus on just two of them, and how their careers were once so close and now so very different. Boris Berezovsky and Roman Abramovich were once friendly business partners who were extremely successful, and now Berezovsky is a political refugee and Abramovich a wealthy celebrity. Born into two separate worlds, these two became major business players following the breakup of the Soviet Union, and now inhabit separate spheres. Read more →
Let’s face it; everyone enjoys a comeback story. It is a part of human nature, and the Russian steel industry is a true example of a comeback. When you think of the Russian economy, you generally think of natural gas and oil, and while these two industries have contributed the most to the rebirth of Russia, the first Soviet-era industry to be reborn was the Russian steel industry. The steel industry’s rise from a dormant, near bankrupt state in the 1990’s has helped thrust Russia into becoming the world’s largest exporter of commodities. The owners of New Russia’s steel industry have demonstrated the best in modern business practices by putting to work substantial cash flows generated from steel sales in a recovering market to replace archaic equipment and outdated plants. When the steel industry was privatized following the collapse of the Soviet Union, the owners were not given everything on a silver platter. They were given companies with outdated equipment that were drowning in debt, which they subsequently transformed into world-class steel companies.
To understand how Russia has emerged as a global juggernaut in the steel industry, you should know the history of Russian steel. Russian steel producers first entered the world market in the 1730s, and by the 1770s had become a world leader in exporting steel. In fact, in the 30-year span between 1770 and 1800, Russia supplied Great Britain with almost 50 percent of their steel used. This period of dominance did not last long though, as protectionist policies and war put Russian steel exports at a competitive disadvantage. In 1790, Great Britain began imposing a tariff on Russian imports that increased annually to allow for the development of its own fledgling industry. Increasing tariffs, the Napoleonic Wars (which created periodic trade embargos) and an increase in competitive global production sunk Russia’s status as a preeminent global supplier of steel. It wasn’t until a new period of Russian industrialization began that the nation reemerged as a giant in steel production. Read more →