It makes sense - that if you can't steal Russian assets, then make deals.
Russia looks like El Dorado on paper - vast land, huge resources, serious technical capacity.
But profit only works where contracts, courts, and ownership are trusted... In Russia, capital is conditional on politics, and since 2022 that risk has become explicit through forced exits, asset seizures, and sanctions. Western sanctions and payment restrictions make normal business simply impossible.
Russia doesn't lack wealth, but wealth without rule of law isn’t if you like, bankable.
1. Russia As “El Dorado” For American Business
Russia looks like a dream market on a map.
- It covers about one sixth of the world’s land surface
- It is rich in energy, minerals, and food.
- Much of this natural endowment remains under exploited
- Important technical skills base
- On paper, this looks like frontier capitalism at scale.
The instinct is understandable.... but so would be the disappointment.
2. The Resource Case Is Real
Russia’s material base is not a myth.
- Energy. One of the world’s largest producers of oil and natural gas.
- Agriculture. A leading global exporter of wheat and other cereals.
- Minerals. Significant reserves of nickel, palladium, platinum, aluminium, and fertiliser inputs.
These are not optional goods.
They are the physical inputs to industry and an advanced economy and civilisation.
This is why Russia repeatedly reappears in strategic calculations, even after political rupture.
3. Human Capital And Technical Capability
Russia is not technologically primitive.
- It sustains nuclear, aerospace, defence, and advanced engineering sectors.
- It has deep scientific and mathematical traditions.
- It produces skilled engineers and software developers.
However, technical capability is not the same as investability.
Markets do not run on talent alone, they need rules - law and its enforcement.
4. The Legal Environment Is The Core Obstacle
This is where the opportunity breaks down alas.
- Predictable courts matter more than cheap skilled labour
- Enforceable contracts matter more than raw materials
- Property rights matter more than projected returns.
On the World Justice Project Rule of Law Index 2025, Russia ranks near the bottom globally.
This is not a moral judgement, it is rather a pricing signal.
5. Expropriation Is Not A Theoretical Risk
Since 2022, foreign firms have learned this the hard way, As we covered in an earlier post.
- Forced exits
- Compelled asset sales at steep discounts
- Transfers to state linked entities
- Restrictions on dividend payments and capital repatriation.
High profile cases, including disputes involving ExxonMobil, have reinforced a simple lesson.
If ownership is conditional on politics, capital demands a massive risk premium, or it simply walks away.
6. Sanctions Change The Entire Equation
Even if governance improved tomorrow, sanctions dominate the near term reality.
- Finance is restricted
- Payments systems are constrained
- Insurance and shipping are limited
- Technology transfer is tightly controlled.
US Russia trade has collapsed to a fraction of pre 2022 levels.
This is not normal friction, it is a structural separation.
The rules are administered primarily through bodies such as Office of Foreign Assets Control, and mirrored by EU measures extended by the Council of the European Union.
7. The “Gateway To China” Argument
In theory, Russia could serve as:
- A resource base
- A low cost energy platform
- A Eurasian manufacturing corridor.
In practice, this logic breaks down.
- China already accesses Russian resources directly, and on strong terms
- US firms operating in Russia would still face sanctions and export controls
- Output aimed at Western markets would be politically fragile.
Geography alone does not overcome geopolitics.
8. Why Business Did Not Replace War
There is a long held belief that trade prevents conflict.
That belief has limits.
- Commerce works when rules are shared and trusted
- It fails when power and security override profit
- States routinely accept economic loss to pursue strategic goals.
When that happens, companies become instruments, or collateral.
This is not an anomaly, it is history repeating.
9. What Would Have To Change
A genuine reset would require:
- A durable political settlement accepted by major sanctioning blocs
- A staged and credible sanctions unwind
- Clear restoration of legal protections for foreign capital
- Evidence, over years, not months, that contracts survive political stress.
Until then, boardrooms will treat Russia as rich, capable, and ... unbankable.
10. Final Judgement
Our framing here is correct.
- Russia is materially wealthy
- It has serious industrial and technical capacity
- It could, under different conditions, be enormously profitable.
But profitability is not enough.
Without trusted law and stable politics, opportunity becomes a trap.
You could say that El Dorado always looks brightest just before the jungle closes in.
11. Glossary Of Terms
-
El Dorado
- A mythical city of gold. Used to describe an opportunity that appears limitless, but proves dangerous or illusory.
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Rule of law
- The principle that laws are applied predictably, including to the state, and that courts reliably enforce contracts and property rights.
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Expropriation
- The seizure or forced transfer of assets, sometimes through legal or administrative means, often with limited compensation.
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Sanctions
- State imposed restrictions on trade, finance, technology, and payments designed to coerce political outcomes.
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Political risk premium
- The additional return investors demand to compensate for uncertainty arising from governance, conflict, or policy instability.
12. References
- World Justice Project, Rule of Law Index 2025.
- FAO, global grain and wheat export data.
- US Census Bureau, US Russia trade statistics.
- OFAC, Ukraine Russia sanctions programme guidance.
- Council of the European Union, sanctions extensions.
- Financial Times and Reuters reporting on foreign corporate exits and asset disputes.
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