Black Monday Blues in Moscow

Column      Dutch businessman Jeroen Ketting has been working in Moscow for 25 years. The sanctions of 2014 hit him hard. The new American sanctions, that were announced last Friday, consumed 12 percent of his budgeted turnover for 2018.

by Jeroen Ketting

'It’s nothing personal; just business' is a catchphrase we have all heard while watching American gangster movies and that hopefully few of us get to hear in real life.

But when you look at the American sanctions regime against Russia then it seems to be 'nothing personal and all business' in real life as well. Or as the Victorian prime minister Lord Palmerston once observed: 'States don't have friends, they have interests.'

For most people in the West these sanctions remain something abstract. Something you are either for or against or have no opinion about. But for many people the sanctions are a reality that affects their daily livelihood.

This Monday brought a special type of Monday blues. It was brought about by the extension of the American sanctions against an additional 26 Russian individuals and 15 Russian companies. The Monday blues for Russia’s billionaires meant that at lunch they were 3.3 billion dollars poorer than at breakfast. For the Russian stock exchange it meant that Russian stock exchange indices dropped with over 11percent by lunch. For the ruble it meant it lost 4% of its value and for many companies it meant they saw 10, 15, 20 percent of their value evaporate in a few hours’ time.

'Tough luck', you might say, 'why should we feel sorry for Russia’s billionaires, state banks and minerals, metals and industrial giants?' Maybe we shouldn’t feel sorry for them but the effect doesn’t stop there. These companies employ millions of people. Just four of the 15 sanctioned companies – VTB, Rusal, Gazprom and Sberbank employ close to a million people. A million families, and then I haven’t even counted the employees of the other 11 companies that fall under the extended sanctions or the companies that were sanctioned in the last 5 years.

jeroen 2Jeroen Ketting

My companies in Russia have been feeling the impact of the sanctions since they first appeared after the deplorable events around Ukraine, Crimea and MH17 in 2014. My market entry business all but disappeared in  half a year’s time in 2014. In 2015 and 2016 we succeeded in turning the market entry business around by becoming a management services provider for our foreign clients in Russia. But in the management services business we continued to lose revenue as a result of the sanctions. Even our bravest clients in the oil and gas sector had to finally give up on the Russian market after the extension of the sanctions last January. In 2017 I invested in a small distribution company selling equipment for dry bulk handling solutions. I figured that dry bulk handling equipment didn’t fall under the sanctions against the Russian oil and gas sector, couldn’t be sold to the military and wasn’t dependent on foreign investments. A safe bet in this environment of economic warfare.

Order on hold

But today, unfortunately, I also got my bit of the Monday blues. Exactly 30 minutes after reading about the potential default of one of the newly sanctioned Russian companies we received an email from the purchasing manager of this particular company putting their order with us on hold. An order we already started producing. 12 percent of our budgeted turnover for 2018 disappeared between breakfast and lunch. That means three sales people that have less chance of bringing their bonus home to spend on education of their kids or holidays for their families. By the way, it also means less turnover for our Dutch supplier.

For five years now I have seen revenue evaporate because of the sanctions. They are being tightened on a quarterly basis. The Americans don’t even bother anymore to explain what the exact reasons are that they apply new sanctions. They just point to Ukraine, Crimea, Syria and cyber-interference, although they have applied sanctions several times before, for exactly the same reasons. It has just become a nasty game in which the American hyenas sense the blood of the Russian bear.

It’s nothing personal; just business.  

Jeroen Ketting zette in 1999 in Moskou zijn bedrijf Lighthouse Russia op, dat westerse bedrijven hielp bij het betreden van de Russische markt. Daar kwam met de sancties na de Oekraïnecrisis een einde aan. De markt droogde snel op. Sindsdien legde hij zich toe op het managen van activiteiten van bedrijven die al in Rusland actief zijn. Hij heeft al jaren last van de sancties. Lees hier een interview met hem.

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