Question: Russia is increasingly in the news these days, both for its high-flying economy and its controversial politics. What’s your take on the situation there?
— Daniel Steinbock, Finland
Answer: All you have to do is stand in the middle of Red Square with your back to Lenin’s Tomb to understand why a billionaire entrepreneur we recently met in Moscow would proudly declare, “Anything is possible in Russia right now.” There, where bread lines once wound around the corner, stands a long row of luxury stores.
Question: What a difference 16 years and vast oil reserves make?
Answer: Indeed, the scene right now in Moscow, with its glitzy hotels and Bentley, Lamborghini dealers, is enough to make you think that Russia’s post-Glasnost era of limping along and irrelevance is over and its future as a resurgent superpower has arrived.
Interference
With their swelling national pride, the Russians would be delighted with that shiny impression. Reality, however, would cloud it somewhat. Shortly after the entrepreneur made his bold statement, the CEO of a technology company told us that government officials regularly call him to “place” managers — that is, well-connected know-nothings — into his ranks.
Of such interference, he sighed, “You don’t like it but you can’t fight it.” Our point is that Russia is a riddle. Without doubt, it is filled with economic promise and has re-entered the global marketplace with renewed clout. But the biggest threats to that promise lie within. And for the time being, it is anyone’s guess how that internal contradiction will play out.
Gaining self-confidence
One thing is certain, though: Russia is currently brimming with self-confidence. The people, emboldened by oil money, have collectively decided to shake off the “has-been” mantle of the country. You can see the change in the authoritative demeanour of hotel clerks, street vendors, and cab drivers. And it’s on the faces of the young people everywhere wearing T-shirts bearing the image of President Vladimir Putin, who, with an approval rating of more than 80 pc the embodiment of Russia’s nationalist mood. Several Nordic and Eastern European executives doing business in Russia told us that the self-confidence has morphed into a worrisome arrogance. Maybe that’s true. But we also saw the self-confidence expressed in positive ways.
A new business school of management is slated to open, with the primary purpose of inspiring new business formation. We met dozens of entrepreneurs whose faith in Russia’s economic future has sparked a new interest in management practices.
Similarly, Russia’s new wealth has created a number “angel investors” for many start-ups. Indeed, when we asked a room of 250 entrepreneurs if anyone considered VC funding a problem, not a single hand went up. One CEO estimated that it would be hard to fill a second or third room of the same size with Russian entrepreneurs. Most businesspeople gravitate given the rewards and security, toward the state-run oil, gas and mineral companies and the industrial factories that dominate the GDP.
Corruption exists
Even if Russia were adequately diversified, it would still have the problem of its corruption and work force. Corruption is an old story, but it shows no sign of a rewrite. As for the work force, Russia still lacks that critical mass of young people filled with passion and ambition required to help it seize economic opportunities. One Russian CEO put it, “Once young people here have a good car, that is enough. After that, they are happy to work in a bureaucracy.”
Finally, there is the prickly problem of Russian politics. Putin’s recent crackdown on internal dissent and his harsh criticism of the many countries that have challenged him-Estonia, Poland, Germany, the UK and the US.
Which brings us back to the riddle. Will the promise of Russia trump its challenges, or the other way around?
Russia itself holds the answer, but the whole world will feel its impact.
Jack and Suzy Welch are the authors of the international best-seller “Winning.” You can e-mail them questions at Winning@nytimes.com. Please include your name, occupation, city and country.