Russia is appearing desperate. Though “desperate” might not cut it.
Russia is in dire need of improving its image to attract investors. The nation has had difficulty communicating its needs and decisions with potential institutional investors, and its plan to turn things around has some people scratching their heads.
The Economy Ministry and Russian Direct Investment Fund have signed an agreement with Goldman Sachs Group Inc. (NYSE: G) in which the bank will work to improve the nation's image for investors.
On paper, the agreement looks pretty good. Goldman Sachs had already worked with Russia in advising OAO Sberbank on equity sales. And it's a large institution with decades of experience.
But many would say Goldman Sachs has an image problem of its own. The company is surrounded by an aura of corporate greed and big bank dominance.
And its presence in Russia hasn't held up well. The bank opened its first Moscow office in 1994, but soon after a global retrenchment forced it to scale back, Bloomberg reports.
When it came back four years later, the bank was opened mere months before Russia defaulted on $40 billion in debt.
But Russia needs to save face with investors, particularly as it plans $10 billion in asset sales for the upcoming year. One of the tricks to that, Goldman Sachs' CEO Lloyd Blankfein said, is offering a fair territory for investors.
From Bloomberg:
“You want to go into a place that's fair, where if you make an investment you can recover your investment,” he said at a panel discussion. “You can go into the U.K. and sue the U.K. government and have a reasonable chance that a court will decide that fairly. There are other places where I think people implicitly know they can't.”
Russia needs to become a place where investors can know that. And officials are hoping Goldman Sachs can help them achieve that, corporate greed aside.
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