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‘Zero Sum’: History, Anecdotes From 35 Years of Business in Russia

January 16, 2025

BOOK REVIEW

“Zero Sum: The Arc of International Business in Russia”Zero Sum book cover with Moscow skyline
By Charles Hecker
Oxford University Press/Hurst, March 2025

Charles Hecker's book "Zero Sum: The Arc of International Business in Russia” is an account of the rise and fall of international companies in Russia—a story spanning from the euphoric late-Soviet 1980s to the tragic breakdown of business relations after the invasion of Ukraine in 2022. The author knows Russia and Russian reality firsthand. He spent many years in the country as a journalist for The Moscow Times and as a risk consultant. He has developed a wide circle of contacts, many of whom have been doing business in Russia for many years, and have shared their memories, assessments and judgments with the author, on which much of the book is based. Direct quotations help to penetrate into companies' decision-making processes under high uncertainty. The author's ability to combine these opinions with his experience as a journalist and consultant enriches the book, even if objectivity is sometimes affected.

Hecker's journalistic experience is evident in his writing style, which is filled with vivid anecdotes that enliven the historical landscape. From admiring foreign executives assessing Russia's potential, to detailed dialogues with gangsters and blackmailers trying to bring managers of foreign companies under their control, to ironic descriptions of Moscow's nightclubs and surprisingly diverse and creative restaurants, to stories of individuals and companies that can span two paragraphs or a dozen pages. The mosaic nature of the book reflects the author's impressions, which may disappoint readers looking for a more straightforward story.

Hecker organizes his analysis around turning points in Russia's recent history. The first chapters examine the first wave of Western companies entering the Soviet Union, lured by the promise of untapped potential. The combination of enormous risk and reward mark this era as companies navigated the volatile environment of the 1990s and early 2000s, shifting to the Putin era, when rising authoritarianism and geopolitical ambitions gradually changed the "rules of the game." According to Hecker, the business community didn't want to adequately assess, and therefore to respond to, Russia's changing economic environment and political trajectory.

The annexation of Crimea in 2014, which signaled the beginning of a change in the international stance toward Russia, became a turning point for international business. Hecker describes foreign companies' growing challenges, from increased regulation to reputational risks. Then, the full-scale invasion of Ukraine in 2022 and the subsequent departure of hundreds of international companies from Russia serve as the book's climax, but the author does not declare it was a comprehensive breakdown in relations between Russia and the global business community. For some companies, ethical principles and moral standards proved more important than profit. Others decided that "not everything is so clear-cut" and to continue making money in Russia, such as Coca-Cola, which stopped producing its flagship soda but is producing a modified version, and Paul Melling, one of the book's heroes, who partnered with Russian managers to buy out the business of Baker McKenzie's, where he used to work before the war. 

The mosaic and anecdotal approach to the narrative sometimes is not without flaws. While the first-person accounts often capture and humanize the complexities of working in Russia, the sheer number of such stories sometimes overwhelms the central idea. Some readers may get lost in the details or distracted by digressions. Another area in which the book may deserve at least some criticism, especially from those who have lived for a long-time in post-Soviet Russia, is the excess of cultural clichés and stereotypes about the country. The shocking nightlife in Moscow, the organized crime that controls many companies and the corrupt and unskilled bureaucracy were and are undoubtedly present in Russia. Still, the frequent reference to such topics does not correspond to Russia's more complex organization of business and political life.

The author's desire to insert as many vivid details as possible sometimes turns into factual errors, which reduces the book's credibility. For example, the author repeats popular myths that Nikita Khrushchev decided to give Crimea to Ukraine in 1954,1 or contestable claims such as that the loans-for-shares privatization scheme was primarily created as compensation for the support of oligarchs for Boris Yeltsin in the 1996 presidential elections2 and that the results of these elections were heavily falsified.3

Overall, the book’s strengths—historical overview and firsthand storytelling—make it a fascinating read for those interested in international business and Russian history. However, those looking for a serious source analyzing the processes that have taken place in the world of Russian business over the past 35 years will need to look elsewhere.

“Zero Sum” is thought-provoking and invites discussion despite its shortcomings. The problems Russia faced after the collapse of the Soviet Union were essentially unique; still, many of their outward manifestations—corruption, mafia, lack of a robust legal system—are found in dozens of developing countries. Foreign companies entering emerging markets must be prepared for this, must be able to resist it and must realize that the desire to make profits without paying attention to internal political processes can result in significant financial losses and personal tragedies. 

Footnotes

  1. Sergei Khrushchev, son of Nikita Khrushchev, claims that the author of the idea of giving Crimea to Russia was indeed Nikita Khrushchev. However, this idea appeared immediately after the war, when Khrushchev was the leader of Ukraine, and Stalin assigned him to deal with the reconstruction of Crimea. At one point, Khrushchev suggested that Stalin cut the Gordian knot and hand Crimea over to Ukraine, but Stalin categorically rejected the idea. In 1949, Khrushchev was given a new job in Moscow, unrelated to Crimea, and never brought up the idea again.  After the Kakhovskaya hydroelectric power plant was constructed in 1952, the Soviet authorities ordered the design of a canal to supply Crimea with water. The design and construction of the canal should have been executed by the Ukrainian government, which had no interest in it. On the other hand, the government of the Russian Federation had to compensate Ukraine for the costs of building and operating the canal. Finding a satisfactory solution for all was too complicated. Then the communist leader of Ukraine, Kirichenko, recalled the idea of transferring Crimea to Ukraine. Remembering his experience, Khrushchev supported Kirichenko in submitting this idea to the Soviet leadership. (Sergei Khrushchev. “Nikita Khrushchev. Reformer. A trilogy about father.” Moscow, Vremya, 2010, pp.162–163) However, no historian supported this story, and no documents related to this issue with Khrushchev's signature have been found in Soviet archives. In early 1954, Khrushchev was the First Secretary of the CPSU Central Committee—a position created in mid-September 1953—and had no independent decision-making authority. Historians are unanimous that until early 1956, the Soviet Union had a collective leadership with Bulganin, Malenkov and Molotov as key figures. It is unknown whether Khrushchev directly participated in the discussion at the Presidium of the Central Committee of the CPSU (transcripts of speeches have not been preserved), and he did not speak at the meeting of the Presidium of the Supreme Soviet of the USSR, where the decision was adopted. Khrushchev’s responsibility is not supported in Mungo Melvin CB OBE. “Sevastopol’s Wars: Crimea from Potemkin to Putin,” Bloomsbury Publishing, 2017. (Chapter 16, pp.585–586). 
  2. The book suggests that the pledge auctions were Yeltsin's payment for the oligarchs' support of his candidacy for the 1996 presidential election. Russian oligarchs united to support Yeltsin in the January 1996 elections in Davos. Boris Yordan came up with the idea of collateral auctions in late 1994. Together with Potanin, they approached Gaidar, who opened the door to Chubais. He supported the idea but forwarded it to the First Deputy Prime Minister Soskovets. Soskovets supported the plan and on March 30, 1995, Potanin presented it at the meeting of the Russian government and received approval. President Yeltsin's decree on pledge auctions was issued in August 1995. The pledge auctions took place in November–December 1995.
  3. There is no evidence that the election results were rigged. In 1996, regional election commissions were appointed by governors and were not controlled by the Kremlin. In many regions, governors openly supported Communist Zyuganov. With certain reservations, I can support the thesis that the 1996 elections were not completely honest—during the election campaign Yeltsin's team used administrative resources, in particular by ensuring that Yeltsin got more time on the federal TV channel ORT. At the same time, the regional television companies that were part of the VGTRK group (Channel 2) were controlled by the governors, who decided which governor to support.

The opinions expressed herein are solely those of the author. (AP Photo/Dmitry Serebryakov)