A possible thaw in U.S.-Russia relations is raising speculation about American companies returning to Russia, three years after exiting due to the Ukraine war. U.S. Secretary of State Marco Rubio recently highlighted “extraordinary” economic and geopolitical opportunities once the war ends, while President Donald Trump expressed interest in economic development deals with Moscow.
Corporate Exodus and Challenges
Since Russia’s 2022 invasion of Ukraine, over 1,000 global companies have withdrawn or scaled back operations due to sanctions and geopolitical tensions. Kirill Dmitriev, head of the Russian Direct Investment Fund, suggests some American firms could return by the second quarter of this year. However, experts remain skeptical, citing reputational risks and an unstable business climate.
Janis Kluge of the German Institute for International and Security Affairs doubts that companies will return, given Russia’s challenging business environment. “It’s too risky for a market of this size,” he said.
Difficult Business Climate
Even before the war, doing business in Russia was complicated by corruption, bureaucracy, and government intervention. Since 2022, Western sanctions have further isolated the Russian economy. Key challenges include:
- Government Asset Seizures: Russia has placed foreign assets under state control, as seen with Danone and Carlsberg in 2023.
- Corruption: Russia ranked 154th on Transparency International’s Corruption Perceptions Index in 2024, dropping from 136th in 2021.
- Financial Restrictions: Sanctions have cut off Russian banks from the SWIFT system, making international transactions difficult.
Shifting Economic Priorities
Russia’s economy no longer offers the same appeal to foreign investors. During the early 2000s, high oil prices fueled economic growth, attracting energy and retail companies. Today, the U.S. competes with Russia in the global energy market, reducing its reliance on Russian oil and gas.
Additionally, the war has reshaped Russia’s workforce and economy, with labor shortages and a focus on military-industrial production limiting investment opportunities. “The whole economy is now driven by the military sector,” said Elina Ribakova of the Peterson Institute for International Economics.
Is Returning Worth the Risk?
Experts warn that any U.S.-Russia diplomatic warming could be short-lived. “What happens if relations deteriorate again?” Ribakova questioned. Unpredictable policies in both countries add to the uncertainty. Michael Rochlitz, an associate professor at Oxford University, noted the risks of making investments in an environment where political shifts can be sudden and drastic.
With high risks and limited profits, most analysts believe that American businesses will remain hesitant to re-enter Russia, despite recent political overtures.
