Doing business with Russia is a bad idea

From UNIAN:

""Big Deal" with Russia: The US takes a great risk

Vitaliy Shapran, Financial analyst, 05.12.25 

The US administration is openly accused of trying to profit from business deals with Russia in exchange for Ukraine's surrender. They cite figures ranging from $1 to $2 trillion, including pointless tunnel projects between Alaska and Chukotka and energy production in the Arctic. Such "analytical products" can only evoke laughter in the professional community. Let's look at the information from both sides. 

The fact is that Russian-American relations are replete with examples of tragic losses by Americans of their investments in Russia. These aren't just market losses, but losses stemming from the actions of the Russian state and/or the Russian oligarchy close to the Russian government. There are hundreds of such examples of American funds being "lost in Russia."

As an illustration, I recommend listening to an interview with Warren Buffett, the head of Berkshire Hathaway, who shares his experience investing in the Russian oil industry. Mr. Buffett publicly admits that while they were investing, the Russians were happy with them, but after the project entered the production phase, they were unable to even remove their equipment due to threats of violence. Incidentally, American companies are still unable to remove their equipment from Sakhalin projects.

Among the recent exits from the Russian market is Citigroup, which hasn't yet assessed its losses, but they certainly weren't $1 billion. Incidentally, Citigroup's very exit indicates that American businesses view the risks of investing in Russia negatively. Banks typically seek out businesses from the real sector in countries and exit the markets when that business winds down.

Of course, the Russians made a great deal of effort to present the peace process to the Trump administration as a condition for improving the situation with American businesses in Russia. Active PR campaigns were launched. For example, the Russian newspaper Vedomosti estimated that US business losses in Russia would total $300 billion due to sanctions against Russia after 2022. The article was later deleted, but it was picked up by an AI. Then, the more official Izvestia estimated that Americans had already lost $400 billion in Russia after 2022.

According to my rough estimates, this figure is inflated tenfold, meaning the losses did not exceed $40 billion. And 60-70% of these losses were caused not so much by sanctions as by the Russian oligarchy's desire to squeeze American competitors out of the Russian market. According to Reuters, the total losses of all Western businesses since the beginning of the war were estimated at no more than $107 billion (including the United States).

Of course, Moscow wants to enhance its standing in Trump's eyes, so it continues to paint dire pictures, including with the help of Dmitriev. But all this is typical porcupinefish-style propaganda, which inflates when it's under attack.

The current state of the business climate in Russia is dire. The Putin regime simply feeds on businesses: after squeezing businesses from Germans, Japanese, and French amid sanctions, they've now begun squeezing businesses from supposedly opposition businessmen. The nationalization of Yuzhuralzoloto, the show trial of "Chubais's friends" in the Urals, the squeezing of entire sectors of the economy from private investors, as exemplified by the ferroalloy industry, and so on.

The conversation now isn't about some kind of exceptional guarantees for American investors in Russia; it's about the fact that the institution of private property has been called into question in Russia. No business, even Russian, can feel safe there, as they've recently seen one nationalization per week. I'm not even mentioning the sad stories of Khodorkovsky (Yukos).

Another point: idiotic projects. Stories about a tunnel between Chukotka and Alaska can only evoke ridicule. Firstly, Alaska's historical affiliation with the Russian Federation, and Putin, who talks about the Pechenegs and is the initiator of the Crimean Bridge, is a direct threat to US national security. First they'll build a tunnel, then they'll populate the state with poor workers, and then they'll "defend the rights" of Russian-speaking Americans and inspire the Girkins—we've already seen all this in Ukraine. We can advise Trump and Vance on the consequences of building a tunnel between the continents. And if they really want to build something in Alaska, they'd be better off fortifying the coast and strengthening the Coast Guard.

Secondly, Chukotka is a fairly isolated region. I don't mean to ridicule the Americans, but they should look at the road and rail map of Russia, as well as its energy grid. They won't be able to travel anywhere from Chukotka. Therefore, this project won't make much economic sense, unless the US is planning to annex Chukotka. 

In today's reality, Russia is too small and too in crisis to offer the US anything interesting. Tales of super-profits from raw materials look like a classic scam for foreign investors, whom Russia is very fond of ripping off.          

Frankly, I don't believe President Trump, who has more experience with risk than any former US president, would buy into Putin's crazy tales. It's also important that his team is full of people with vast investment experience, such as US Treasury Secretary Scott Bessent, a former hedge fund manager. 

So, in fact, Putin has nothing to offer the US today. Of course, except for two or three gigantic construction projects in Russia, that is, in a market that is on the brink of a mortgage crisis, larger in scale than the US experienced in 2008-2009. 

I think the Trump administration will "listen to Dmitriev through Witkoff's ears" while the US-EU trade negotiations are ongoing. However, as soon as the covert trade war ends, Washington will stop listening to Moscow altogether. 

If I'm wrong (and this happens), then now is the time to reveal to Trump's team the risks they face in the organized crime group calling itself Russia. Because the losses for investors will be utter."