The uncertain thaw in the icy US-Russia relationship is paving the way for US companies to do something that until recently seemed unthinkable - return to the country three years after they left it en masse.

After talks with Russian officials last week, U.S. Secretary of State Marco Rubio extolled the "extraordinary opportunities" economically and geopolitically that the U.S. and Russia can seize after the end of the war in Ukraine. On Monday (24.02), US President Donald Trump said he was "trying to make some economic development deals" with Moscow.

The scale of US corporations leaving Russia after its invasion of Ukraine in 2022 could make that project difficult, as few US companies are left in the country to strike any deals. According to a list compiled by the Yale School of Management, more than 1,000 global companies have voluntarily left or curtailed operations in Russia since then.

Kirill Dmitriev, head of the Russian Direct Investment Fund, said he expects some U.S. companies to return as early as the second quarter. But analysts doubt that, arguing that the reward for reinvesting in Russia would be too small for companies to justify the potential cost.

"I'm skeptical that many companies would risk their reputation and venture into this very dangerous and risky business environment for this relatively small market," says Jannis Kluge, a researcher at the German Institute for International and Security Affairs, or SWP.

"It's still too toxic for American businesses to make much money there," he told CNN.

Unsustainable environment

Russia has long been a challenging place to do business.

"Before, there were constant problems in terms of corruption, bureaucracy and dealing with the Kremlin," said Timothy Ash, a Russia specialist at Chatham House, a London-based think tank, and senior strategist at RBC Blubey Asset Management.

But after the invasion and the slew of economic sanctions imposed by the West on Russia, the country has become an even more complicated place for companies. Perhaps the biggest risk facing foreign firms is the prospect of the Kremlin seizing their assets.

In 2023, Russian President Vladimir Putin signed a decree allowing the government to place foreign assets in the country under its temporary control. Months later, the Kremlin nationalized the domestic assets of French yogurt maker Danone and Danish brewer Carlsberg.

Corruption has also deepened from its already high levels. In 2021, the non-profit organisation Transparency International ranked Russia 136th, alongside Liberia, in its ranking of 180 countries and territories for their perceived levels of public sector corruption. By 2024, Russia slides further down the corruption perception index to 154th place, tied with Azerbaijan, Honduras and Lebanon.

Meanwhile, the Russian economy has become less integrated with the rest of the world, largely due to sanctions.

Soon after the invasion, the US, EU, UK and Canada banned some Russian banks from using the SWIFT system, a high-security network that connects thousands of financial institutions around the world. This has made it much more difficult for these banks to send and receive money from abroad.

The United States could not have readmitted the banned banks to the network without the EU's cooperation, as SWIFT is based in Belgium," Kluge added.

Similarly, even if the United States reverses its extensive set of export controls and asset freezes imposed on Russia from February 2022, its major trading partners will not necessarily reverse their own measures against Moscow. On Monday, the European Union approved its 16th batch of sanctions against Russia.

"It has become very expensive and cumbersome to even do a transaction in Western currencies from (inside) Russia," Kluge explained, noting that sanctions have "made continuing to do business in Russia untenable for many Western companies."

A bygone era

According to Elina Rybakova, a senior fellow at the Washington-based Peterson Institute for International Economics, Russia is no longer "the obvious place for foreign companies to make money." And it hasn't been for about a decade.

The boom in the Russian economy, which Rybakova puts in the period from the early 2000s to about 2014, coincided with the boom in oil prices. At the time, Moscow was profiting by exporting vast quantities of oil and natural gas to the rest of the world, including the United States. A significant number of foreign companies setting up in Russia are energy producers as well as retailers hoping to sell their goods to the country's growing middle class, she says.

Now, "the cards have changed dramatically" as America no longer needs Russia's natural resources. Not only is America producing far more oil and natural gas than in previous decades, but it is also exporting the fuels and thus competing directly with Russia in the global energy market. For example, Europe has increased its imports of American LNG - a form of natural gas that can be transported by ocean tankers - to replace supplies traditionally imported from Russia.

The war has also shrunk Russia's middle class. Many people fought or died on the battlefields in Ukraine, or left the country at the start of the invasion, even though wages rose due to acute labour shortages.

The entire economy is now driven by the military-industrial complex, Ribakova said. And this is a sector in which the United States and Russia are unlikely to find "natural cooperation," she noted.

The risk is not worth it

For foreign companies, returning like a boomerang to Russia simply isn't worth it because of the huge risk.

The main headache for returning companies will be the likely fragility of any diplomatic showdown between Moscow and Washington, analysts warn.

"What will happen if Russia's attitude (toward the U.S.) changes? Maybe today they will lay down a red carpet. And what will happen tomorrow? It's very unpredictable," Ribakova said.

The uncertainty will work both ways, says Michael Rohlitz, associate professor of Russian, Eastern European and Eurasian economics at Oxford University.

"Under the Trump administration, every day, every week (it) changes a lot. So do you really want to make investments based on these volatile policies? What's going to happen in four years if there's a Democratic president?" he asked.

Rohlitz sums up the situation by bluntly warning businesses returning to Russia, "High risk, low reward." |BGNES