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Tune Out Rhetoric and Invest in Russia

Wednesday, 6 Jun 2007 | 2:59 PM ET

Is investing in Russia worth the risk? On "Power Lunch," two experts on the European colossus agreed: "While politicians battle, businessmen do business." James Goldgeier, senior fellow at the Council for Foreign Relations, and Alexander Kliment, an associate in Eurasia Group's Europe and Asia Practice, joined CNBC's Sue Herera to dispel investor anxiety.

Russia: Risk vs. Reward
Debating the issue of whether it's safe to invest in Russia, with Alexander Kliment, Eurasia Group associate in Europe & Eurasia practice; James Goldgeier, George Washington Univ. political science & intl. politics prof.; and CNBC's Sue Herera

As the Group of Eight meet, one shadow falls across their summit: Russian President Vladimir Putin's threats to turn his missiles westward, if U.S. President George W. Bush proceeds with a proposed missile shield in Central Europe.

Besides Putin's authoritarian style of rule, Goldgeier pointed to another factor souring Moscow's relations with the European Union: the EU has welcomed nations like Poland, Estonia and the Czech Republic -- former vassals of Czarist Russia and the Soviet Union, still wary of Kremlin intentions.

But Goldgeier believes the "rhetoric out of Moscow" is designed for a domestic audience -- as a balm for Russians' wounded pride. Financiers recognize as much, Goldgeier said, as thorny relations haven't stopped the flow of business in the vast nation.

Kliment agreed, describing global business and politics as "two different voices." He maintained that the "escalation in political noise" hasn't dampened "bullish interest" by investors. Surprisingly, he said even foreign energy companies are interested in Russia -- even though they "took a beating" after Putin's nationalized many energy assets and producers like oil giant Yukos, and the Russian government put Yukos' ex-CEO Mikhail Khodorkovsky on trial.

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  • Sue Herera is a founding member of CNBC, helping to launch the network in 1989. She is co-anchor of "Power Lunch."

  • Tyler Mathisen co-anchors CNBC's "Power Lunch." Mathisen also co-anchors "Nightly Business Report produced by CNBC."

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Kenny Polcari