assessments

Russia: The Value of a Country's Name

2 MINS READJan 10, 2008 | 14:56 GMT
ROLAND MAGUNIA/AFP/Getty Images
Russia is implementing a new law which could force thousands of Russian and foreign companies to change their names. The legislation forbids the use of official names of countries, their derivatives, or the names of federal and regional bodies in company names. The new law targets foreign companies like Deutsche Bank, British American Tobacco and Nestle-Russia. According to STRATFOR sources, Deutsche Bank is asking if the company can pay some sort of repeated fine to continue to use its name. Failure to comply with the new law, which will take effect in late 2008, is expected to be punished with heavy fines. But Russian firms will also be targeted, since the name Russia and Russian Federation will only be allowed to be used by companies that are at least 75 percent state-owned. This could affect Russia’s largest airliner, Aeroflot, which is officially named Aeroflot-Russian Airlines but is only 51 percent state-owned. The airliner said it would fight the change, but the government responded that Aeroflot has never had the status of "national carrier," and either the airline will have to either give more of itself to the state or give up the name. The government said that in implementing the new law, it is looking out for the public's interest and will uphold Russia's laws on morality — a reason that does not seem to hold much logic. On one hand, the policy could lead to a huge financial windfall for the state, which will gain from companies reregistering under new names. Financially, the move — as seen in the Aeroflot case — also gives the state an excuse to push for larger company stakes. On the other hand, this is just another case of Russia pushing for more pro-Russian and nationalistic policies, making the Russian name something only the state can use. But it also provides for a sort of foreign cleansing of company names. In the end, this policy deepen the divide in Russia between state-run companies and everything else.

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