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Published: Sunday, 11/15/2009

GM acted wisely by hitting brakes on Russian deal

In an overly publicized outburst at a cabinet meeting earlier this month, Russian Prime Minister Vladimir Putin accused General Motors of "scornful" behavior after the American company canceled a plan to sell off a German car maker to a Russian-Canadian consortium.

"The last-minute refusal to complete the Opel deal is not harmful to our interests, but it shows that our American partners have a very original culture when dealing with counterparts," Mr. Putin said.

However, there's no need to worry that Mr. Putin's feigned indignation will seriously harm the already chilly U.S.-Russian relations despite the obvious harm it has done to the survival prospects of Russia's backward automobile industry.

Such antics notwithstanding, the Kremlin is far more worried about refilling its dwindling coffers through trade deals with such traditional partners as Iran, China, India, Syria, and Venezuela that are rife with kickbacks.

The United States, which forbids bribing foreign officials, is useless to the Kremlin in that sense.

Truly, in that sense, Mr. Putin was telling the truth - the Kremlin's self-interest was not hurt by the GM decision.

In any case, Mr. Putin could hardly expect anyone to believe in his hurt feelings given the former president's track record of persecuting Russian business leaders who dared to do business with the U.S. or its allies outside of Kremlin-controlled business structures.

Here are some examples:

•The Yukos saga, in which the Kremlin selectively used the Russian judicial system it totally controls to imprison the oil giant's leaders, seize the company, break it up, and transfer the ownership of its largest asset to a Kremlin-controlled business entity. These maneuvers occurred after it became known that a large stake in the company was about to be sold to U.S. companies.

•Russia has recently been terrorizing more than a dozen countries in Europe by shutting off gas supplies via Ukraine to punish the latter for its pro-Western orientation and force it to pay a higher price for Russian gas.

•Police in Moscow have periodically raided businesses owned by ethnic Georgians and have on one occasion shut down all transportation links with Georgia to force its pro-Western president to abandon his hopes of Georgia joining NATO.

Given the high political risk of doing business with Russia, it is only natural that General Motors would renege on the Russian deal once the economy in Europe started to look up.

Just a few of the indignities that General Motors has avoided by refusing to deal with the Russians include harassment by the state's officials at all levels, extortion, and potentially massive job losses by General Motors' plants and their many suppliers across the United States and particularly in the Midwest.

Even if such a decision may seem to contribute little to U.S. economic recovery in the short term, it is indisputably a smart move in the long run.

As for Mr. Putin, he would do his country a favor by not alienating the leadership of one of major investors in its economy.

The bottom line is that Mr. Putin needs an attitude adjustment if he expects to do serious business with the United States.

Mike Sigov, a former Russian journalist in Moscow, is a naturalized U.S. citizen and a staff writer for The Blade.

Reach him at:

sigov@theblade.com

or 419-724-6089.



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