№ 2 (February 2007)
Gazprom Calls Up the Heavy Artillery
Pat Davis Szymczak
It's one thing for Gazprom to snatch a share out of the Sakhalin Energy project; to play hard ball with TNK-BP in Kovykta, or to talk tough with ExxonMobil. It's another thing to steal the big idea I got at New Year for my next editorial - Russia needs to hire a consortium of the best western PR agencies it can find ... quickly!
While watching Gazprom (and Russia by association) shoot itself in the foot this New Year for the umpteenth time on international television, I found myself shouting in the dead of night at the flickering screen - "can't you guys find a PR guy with brains?" I've deleted the expletives here that accompanied my comments - some quite colorful and in two languages! (My Russian is improving.)
Later in the month from Davos, an executive from Ernst&Young's Moscow office - a foreigner like myself - said the same to the press. He also said that foreign companies working in Russia need to shout more loudly that it's good to do business in Russia. And trust me, there are many good things; it's just that talk of them is missing from the media. A favorite sport of Russophile foreigners is to swap tales of what they've seen and read in U.S. and European media while visiting home. For the most part, what we see and hear can't be about the same Russia where we live and work. Yeah, the facts are usually correct, but the spin seems to come from Mars.
Many of the frustrations I've encountered as a business owner here have more to do with being a small U.S. business and not being able to organize on the U.S. side of things what could easily be organized if my branch office were anywhere in the world but Moscow. For example, my U.S. bank won't give me a merchant banking account to accept credit card payments over the Internet from U.S. subscribers to Oil&Gas Eurasia. Why? Because our U.S. company has a branch office in Moscow!
Maybe if I printed OGE in Bagdad where U.S. banks think the economy and political environment is stable, no problem! Guys, are we on the same planet? My bank in Houston, Texas equates any financial operation involving Russia with money laundering. I've got news for the FBI - if you think cash flows the size of mine can fund international terrorism, all the terrorists in the world would have starved to death a long time ago!
And if that's not crazy enough, how about this? The U.S. and Russia worked out their differences such that Russia can join the WTO. But when Russia does join, U.S. companies will be the only companies in the club that won't be able to take advantage of the favorable trade terms Russia will be able to offer. Why? Because U.S. companies will still be constrained by the Soviet era Jackson-Vanik amendment. Wake up! The Soviet Union ceased to be 15 years ago and we're still trying to get rid of Jackson-Vanik? The problem is "we" aren't in Washington enough - we're too busy trying to find a U.S. bank that will give us a merchant banking account for e-commerce.
So getting back to my original thought - Gazprom (or Russia, don't know if it makes a difference) and its (their) PR problems. It seems that Gazprom has read my mind. Check this out from The Wall Street Journal (Jan. 29, 2007) -- Gazprom, the Russian gas company that supplies approximately one quarter of Europe's gas needs, is planning a PR and lobbying campaign in Europe and the U.S. to improve its image, after it cut off gas supplies to the Ukraine in 2006 and Belarus in 2007. (Russia's business daily) Kommersant reports that Gazprom Export, a subsidiary of Gazprom, is negotiating with a consortium comprising the PBN Company, Hill&Knowlton and the polling firm Penn, Schoen and Berland Associates for a three-year contract worth $11 million. "In the West, Gazprom is closely associated with the name of Russian President Vladimir Putin and his political circle. The company wants to position itself differently," an anonymous source said. The Kremlin is also considering another PR and lobbying campaign to boost its credibility in the West. Short-listed firms include Patton Boggs, Hogan&Hartson, Weber Shandwick, Burson Marsteller, Barbour Griffith& Rogers, Ruder Finn and Hill&Knowlton.
Praise the Lord! We're ALL saved! And Gazprom is paying for it! I'm especially pleased to see the name Hill&Knowlton in the mix. For our Russian readers and others outside the U.S. who might not catch the point, Hill&Knowlton is legendary for handling just the sorts of problems Gazprom and Russia have. During the first Gulf War in the early 1990s Hill&Knowlton handled the PR/lobbying effort that convinced the American public it was a good idea to launch Desert Storm. At first average voters opposed the war. But minds changed quickly when well spun tales of Iraqi atrocities in Kuwait (some real, some not) hit the front pages of influential newspapers and were testified to in congressional hearings. CBS News "60 Minutes", a popular investigative journalism TV show broke the story sometime after the war ended. Today this "Wag the Dog" tale is a case study in textbooks taught in university journalism programs in the U.S.
But my point, irony aside, is that Gazprom is assembling a team of the best and brightest. And the facts that underlie this assignment really are already positives.
Convinced? I hope so. I've have done my bit as a voice from the ranks of U.S. small business. Now it's up to Gazprom to take care of things with the heaviest artillery they can muster in Washington D.C. Go get 'em Gazprom! Next year, I'll be reapplying to my U.S. bank for that internet based merchant banking account! I hope Gazprom's spin will have changed the minds of the American heartland!