№ 4 (April 2006)
"The Ant & the Grasshopper" - Norwegian Twist to Aesop's Tale
Pat Davis Szymczak
Trying to analyze the good and the bad of the Russian economy these days leaves me contemplating Aesop's ancient Greek fable of the ant and the grasshopper (dragon fly in Ivan Krylov's 19th Century Russian version). During the summer of plenty, the grasshopper fiddled while the ant worked to store goods for the winter. In Moscow's mass media this week, Russia's Union of Industrialists and Entrepreneurs warned that Russian industry was at risk of stagnation. So what's all this talk about a Russian economy in the throws of astounding growth? In two words: oil and gas of which Russia has plenty. But as Alexander Shokin, president of the industrialists union told the English language daily Moscow Times, high growth is occurring only in sectors protected from imports: retail, financial and construction. Other sectors are stagnating, Shokin said.
This same week Russia's State Duma approved on first reading a bill presumably to assist law enforcement in fighting terrorism. No argument with that, but the bill was also fuzzy enough to give corrupt bureaucrats an even greater chance to profiteer by preying on innocent private business. Not a good idea if Russia wants a strong, diversified economy.
Short Sighted? Look Who's Talking
Anyone who has worked with Russians for any length of time knows that they are by nature notoriously short sighted. My friends blame the Mongols, the czars, the Soviets, Boris Yeltsin. They tell me, you have to grab what you can today because tomorrow may never dawn. Go for big money, spend it right away on luxury goods that will make you feel good, and don't think about retirement.
Wait a minute. This rant has plenty of parallels in the West as well: business decisions based on quarterly earnings; and I'd be embarrassed to describe the state of my American pension plan (or lack of one). But let's get back to Russia. Mr. Shokin at Russia's industrialists union actually used the word "deindustrialization" in his remarks. Yes, folks he said that if Russia doesn't get its act together it risks deindustrialization.
This is scary stuff; and guess who cares? The Norwegians apparently! Let's get back to Aesop. Though he penned his fable 600 years before the birth of Christ, it teaches us to value the "Protestant Work Ethic." As an American I've had the opportunity to observe many European immigrant groups in the United States and I've been amazed at how stereotypes ring true when you actually visit the home country of these immigrants.
Hats off to the "Scrubby Dutch"
Americans of my generation categorize Norwegians as "scrubby Dutch". Translated that means they are hard working Protestants who save their money, are never in debt, make plans to provide their children with an inheritance; they are highly organized and proud of it. That's the "Dutch" part. The "scrubby" part comes from their reputation for being so clean and tidy that housewives will scrub the sidewalk outside the home.
On my first visit to Norway's capital, Oslo, I laughed out loud while driving in from the airport. Not a soul was scrubbing the sidewalk but the windows of homes, whether poor or rich, were so clean they resembled mirrors.
Before the North Sea oil boom of the 1970s, Norway was a poor nation of fishermen, boat builders and farmers. Much of the population had left the country for the U.S. or Canada in the 19th and early 20th centuries. Those that had left were a hardy lot, crossing the Atlantic in small wooden boats I wouldn't trust on the Moscow River. As the oil wealth started to pour in, Norway - rather than spending it all in a wild orgy - started saving. The government set up programs to invest money to provide public funds for future generations when its oil and gas may be depleted. But most importantly, the government invested in transforming Norway's shipbuilding industry into an offshore oilfield services and supply industry based on the highest technology.
Norway Now "Pays It Forward"
Surprisingly, some of the most cutting edge oilfield technologies sold by the biggest international service companies were developed by Norwegian majors such as Statoil or Hydro and later sold to companies like Schlumberger that market them world-wide. To industrialize quickly, Norway also invited in foreigners. In the 1970s, the most developed offshore oil province was the U.S. Gulf of Mexico. U.S. firms migrated to Norway where they transferred technology to create a base from which a domestic Norwegian industry was able to take root, then grow and prosper on its own.
Now the Norwegians want to help Russia in a similar way. If Mr. Shokin is reading this issue of Oil&Gas Eurasia, I urge him to read carefully our Hydro story which starts on page 14. Of course Hyrdo's end goal is to make money by producing oil in the Barents Sea. But Hydro knows it makes business sense to support that production from a local supply base; and Hydro understands it is good business to be a good neighbor by creating jobs and a better lifestyle for Russians living along the Barents Sea.
Hydro launched its effort three years ago to transform industry in Murmansk and Arkhangelsk into a supply base for Barents Sea oil projects. Hydro's first step was to survey local plants and to prepare the most perspective Russian companies in the Barents Sea region to participate in tenders to supply projects internationally via the Achilles system. Hydro's most recent step, and the subject of our article this month, is to open Hydro Intershelf Centers in both Murmansk and in Arkhangelsk for training and to otherwise facilitate technology transfer. Hydro now also has a branch office in Murmansk.
I mentioned in the beginning that this fable has two versions. Aesop's ends with the grasshopper coming to acknowledge the value of hard work and delayed gratification before he dies. Krylov's Russian view ends with the ant refusing the dragon fly's request for food and shelter. The dragon fly dies a victim of what Krylov portrays as a heartless "upper class ant" that won't share his wealth. (I'd say, "hard earned" wealth, but that's the Protestant in me. I'm a fan of Aesop.)
No comment. Let's wait and see what the Norwegians can do about this one. It seems we're now spinning a composite of these variations on a theme. So far, the industrious Norwegians (obviously in the role of the ant) have let the dragon fly into their home. This ant seems eager to share its wealth. Now we have to wait and see if the dragon fly - having been given a chance to put its own house in order - gets in line with Aesop's ending and actually gets the point.
No hurry. We've got time. The summer is only starting! Now, who took the fiddle?