Graham Stack in Berlin -

It is hard to get alarmed by investors buying into tour companies, however big, but Germany's influential Der Spiegel nonetheless rang the alarm bells when Russian steel oligarch Alexey Mordashov recently bought 10% of tourism giant TUI. But while a spate of acquisitions in Germany and Switzerland by Russian oligarchs is triggering paranoia about attempted political influence, Russian firms are more focused on conquering their domestic market - by buying up Western expertise and technology.

"What do the Russians want? Profits or political influence?" screamed Der Spiegel, before going on to accuse Russian investors of running a "simple plundering scam." Describing in lurid tones the "fairytale riches" of Mordashov and his colleagues, the magazine concluded that, "they cannot find any profitable investment opportunities in Russia, so they are coming to Germany. The ruble is rolling towards the West."

Fears that the Kremlin might gain control over German summer holidays were reminiscent of the quip in 2007 that the Russians were claiming the North Pole to control Christmas. A sense of realism returned days later when TUI and Mordashov's investment vehicle declared they were founding a joint venture in order to tap into the potentially vast and booming Russian and CIS tourist market. Russian firms, it seems, are interested in acquiring technology and expertise to conquer the booming Russian domestic market by importing best practices on a large scale, they're not looking to create a fifth column in the West, despite what the headline writers say. So far from reflecting a lack of investment opportunity in Russia, as Der Spiegel alleges, the exact opposite is true: such acquisitions directly reflect the massive investment opportunities opening up in Russia, ranging from an underdeveloped service sector benefiting from booming consumption, to upgrading scanty and crumbling infrastructure through generously sponsored public-private partnerships.

Mordashov's interest in tourism is a reflection of the potential size of the Russian tourism market, and its current fragmentation. While Western Europe's tourism market is saturated, Russian outbound tourism is the fastest growing in the world. According to the Russian Federal Agency for Tourism, between January and June 2007 a staggering 13.7m Russians went abroad for their holidays, with destinations such as Croatia, Egypt, and Greece growing 130-150% in 2007. Moreover, Russians, with their two-week compulsory break in January when the rest of Europe is back to work, are a tour operator's dream - and one that Mordashov's investment in TUI hopes to turn into reality.

Only a few days before Mordashov became TUI's largest single shareholder, fellow oligarch Len Blavatnik, valued at $7.2bn by Forbes magazine, snapped up a 19% stake in Air Berlin, Europe's third-largest discount airline with a market capitalization of €506m. Air Berlin is the only one of Europe's big three budget airlines currently present on the booming Russian aviation market, with flights from Germany to Moscow and St Petersburg. Budget airlines are in their infancy in Russia, but this is another market ripe for growth.

Retooling Russia with European tech

Outside the tourism sector, on March 26 the Russian holding company FLC West, linked to Russia's state-owned United Aircraft-building Corporation, bought 70% of the Aker shipyards in the German Baltic town of Rostock for €292m. Again, there was nothing coincidental about this purchase. The Kremlin launched a programme to revive Russia's moribund ship-construction industry in 2007 by uniting state-owned naval shipyards in a holding - the United Aircraft-building Corporation, sister of the United Shipbuilding Corporation. The declared aim of the United Shipbuilding is to refocus state-owned shipyards from naval to commercial shipbuilding. Hopes are pinned on the niche of ice-class shipping - to serve the Russian energy sector's growing demand for oil tankers, LNG tankers, pipeline-laying ships and supply ships capable of plying the icebound waters of the Arctic.

The Kremlin wants Russian shipyards to corner this market and win what Putin called in his 2007 parliamentary address, "a decent niche on the global market." And in February 2008, the then-presidential candidate Dmitry Medvedev called on Russian companies "to acquire foreign enterprises both directly and through participation in joint stock capital [and] help re-equip Russian enterprises, enhance their production, diversify investment and gain new markets."

This is where the Aker shipyards come in: Russian shipyards lag far behind in commercial-use technologies. The Aker shipyards are already producing ice-class dry-bulk carriers for Russian corporations such as Norilsk Nickel, the world's largest nickel producer. The shipyards produce double-acting cargo vessels, the sterns of which are designed to double up as ice-breaking bows. A pioneering technology specially developed for Arctic shipping - and one now in Russian hands.

The equation is the same when it comes to uber-oligarch Oleg Deripaska's investment in German-Austrian construction giants Strabag and Hochtief. In 2007, Deripaska acquired 10% of Germany's Hochtief and 30% of Austria's Strabag, both construction and infrastructure giants, in anticipation of Russia transforming "into a gigantic building site," in the words of Deutsche Bank. A state-sponsored infrastructure building programme will, according to First Deputy Prime Minister Sergei Ivanov, be worth a staggering $1 trillion over 10 years. "This country needs everything: roads, hospitals, schools, airports, cars, trains, airplanes," Deripaska said in a November 10 interview about his European construction industry acquisitions. "There is huge demand, and supply is not coping."

Russians not welcome - yet

On April 4, the same day Blavatnik announced his acquisition of a stake in Air Berlin, an old friend from his student days, billionaire Viktor Vekselberg, announced he was increasing his year-old stake in Swiss technology concern Oerlikon, in which he first invested in 2007. That year, Renova also bought into Sulzer, the major Swiss engineering company producing, among other things, state-of the-art equipment for the oil industry. Renova is an energy-focused conglomerate with stakes in oil major TNK-BP as well as power generation assets. In a January interview with Russian business daily Vedomosti, Vekselberg put the total investment in Switzerland at $3bn-4bn.

The unexpected double acquisition raised hackles in Switzerland and was challenged in court. When asked by Vedomosti what his motive for investing in Oerlikon was, Vekselberg answered: "to get access to technology that we don't have in Russia," especially in the sphere of alternative energies - wind, solar and biofuels. Vekselberg patiently talked down the hostile response to his investment. "No one anticipated the appearance of major Russian investors in one of the historic leaders of the Swiss economy. They asked: 'and what do these Russians want?' You have to laugh, but they saw the Kremlin's hand behind it all. They're just not used to us - but given time that will change."

Hardly had the news of Russian oligarchs' new business operations in Germany subsided, than a new rumour was doing the rounds on April 11: that Russia's largest bank, Sberbank was poised to acquire Dresdner Bank's investment banking arm, Dresdner Kleinwort. However, in this case there was hope rather than suspicion in the German reports: Dresdner Kleinwort has been badly hit by the global financial crisis, is wearing a "save me" sign, but has nevertheless been turned down by potential investors such as the Chinese Investment Corp. sovereign wealth fund.

The Russian side, however, was quick to dismiss the rumours. Renaissance Capital's banking analyst David Nangle says that while it's obvious that Dresdner Kleinwort is being touted for a sale and there may have been some contacts in this connection with Sberbank, "I've been talking with the Sberbank people and there's simply nothing behind it."

"Sberbank are looking to add on an investment-banking wing, that much is true, but it's going to be in Russia where their corporate clients are, of course. Either they'll buy into a Russian investment bank, or most likely they'll do it organically," he says. "Dresdner Kleinwort might be going cheap, but Sberbank is far from going on a European shopping spree without rationale or strategy."

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