Michelle ThompsonA slight easing in tense US-Russia relations is opening the door for American firms to consider something that recently seemed impossible—returning to Russia three years after their mass departure.
Following key discussions with Russian officials last week, US Secretary of State Marco Rubio highlighted the “exceptional opportunities,” both economic and geopolitical, that the US and Russia could leverage once the Ukraine war ends. On Monday, US President Donald Trump also stated he was “working on some economic development deals” with Moscow.
However, the large-scale corporate withdrawal from Russia after its 2022 invasion of Ukraine complicates this effort, as few American firms remain to negotiate deals. Since then, over 1,000 global companies have either exited or significantly reduced their presence in Russia, according to Yale School of Management data.
Kirill Dmitriev, head of the Russian Direct Investment Fund, expects some American companies to return as early as the second quarter, as reported by Russian state media agency TASS last week.
Analysts remain unconvinced, arguing that the potential benefits of reinvesting in Russia do not outweigh the risks.
“I doubt many companies would jeopardize their reputation by entering such an unstable and risky business environment for a relatively small market,” said Janis Kluge, a researcher at the German Institute for International and Security Affairs (SWP).
“It’s still too controversial for American businesses to generate significant profits there,” he told CNN.
A ‘nonviable’ landscape
Russia has long posed significant challenges for businesses.
“There were persistent issues with corruption, bureaucracy, excessive regulations, and dealings with the Kremlin,” said Timothy Ash, a Russia expert at Chatham House and senior strategist at RBC Bluebay Asset Management.
Since the invasion and subsequent Western sanctions, operating in Russia has become even more difficult. The biggest threat now for foreign firms is the potential seizure of their assets by the Kremlin.
In 2023, Russian President Vladimir Putin signed a decree granting the government authority to temporarily take control of foreign assets. Soon after, the Kremlin nationalized the local operations of French yogurt maker Danone and Danish brewer Carlsberg. Corruption, already a major concern, has worsened. Transparency International ranked Russia 136th in 2021 for public sector corruption, but by 2024, the country had dropped to 154th, alongside Azerbaijan, Honduras, and Lebanon.
Sanctions have also made Russia’s economy more isolated. According to Kluge at SWP, this detachment is largely due to Western restrictions.
Shortly after the invasion, the US, EU, UK, and Canada banned certain Russian banks from SWIFT, a secure network used by global financial institutions. This has severely hindered their ability to conduct international transactions.
The US alone cannot reinstate these banks without EU approval, as SWIFT is headquartered in Belgium, Kluge noted.
Even if the US lifts its sanctions and trade restrictions, other major economies may not follow suit. On Monday, the European Union imposed its 16th round of sanctions on Russia.
“It has become extremely costly and complicated to process transactions in Western currencies from within Russia,” Kluge said, emphasizing that sanctions have made business operations unsustainable for many Western companies.
A past chapter
Russia is no longer a “natural destination for profit” for foreign firms, says Elina Ribakova, senior fellow at the Peterson Institute for International Economics in Washington, DC. She told CNN that this has been the case for nearly a decade.
The peak of Russia’s economic success—between the early 2000s and 2014—was driven by soaring oil prices. During that period, Moscow thrived by exporting vast amounts of oil and natural gas globally, including to the U.S. Many foreign businesses entering Russia were energy companies or retailers targeting its expanding middle class, she noted.
Now, “the dynamics have completely shifted” as the U.S. no longer relies on Russian resources.
An oil processing facility at the Yarakta oil field in Russia’s Irkutsk region, photographed in March 2019.
The United States now produces significantly more oil and natural gas than in past decades and exports these fuels, directly competing with Russia in the global energy market.
For instance, Europe has increased its imports of American liquefied natural gas (LNG)—a cooled form of natural gas transported via ocean tankers—to replace traditional Russian supplies.
According to Ribakova, the war has also reduced Russia’s middle class. Many individuals have either joined the military, lost their lives in Ukraine, or left the country at the start of the invasion, though wages have risen due to severe labor shortages.
Ribakova further noted that Russia’s economy is now primarily driven by its military-industrial sector—a field where collaboration with the United States is unlikely.
Not worth the risk
For foreign companies, returning to Russia simply wouldn’t be worth the trouble.
One major challenge would be the fragile nature of any diplomatic thaw between Moscow and Washington, analysts told CNN.
“If Russia’s stance toward the U.S. shifts, what then?” said Ribakova. “Today, they may roll out the red carpet, but tomorrow? It’s highly unpredictable.”
This uncertainty goes both ways, noted Michael Rochlitz, an associate professor specializing in the economies of Russia, Eastern Europe, and Eurasia at Oxford University.
“With the Trump administration, policies shift constantly. Do you really want to invest under such unpredictable conditions?” he asked. “And what happens in four years if a Democratic president takes office?”
Rochlitz summed up the outlook for businesses considering a return to Russia: “High risk, low reward.”
