Senator Trevor Eyton remembers what it was like when a popular hamburger chain wanted to open its first Moscow location: A joint venture of the Canadian subsidiary of McDonald's and the Moscow city council, the US$50-million project almost collapsed several times before it was finally signed in the spring of 1998.

"Scarcity of fresh produce and well- committed personnel was a real challenge. The Russian population didn't know what to think of retail fast food back then," he says.

"Moscow today is a much different picture, however. There are now top restaurant chains and mega-malls selling some of the biggest mega- brands in the world. Everything has changed dramatically."

Eyton was named earlier this year by the federal government as chair of its new Canada-Russia Roundtable, a group designed to promote bilateral trade between the two countries.

Dmitry Medvedev

During a speech to the Economic Club of Toronto last month, he told local business leaders the time to act was now.

"This is a Russia that wants to change. The only question is who will be there first with the opportunity to create change ... and who will be left scrambling with the pieces that fall from the table," he said in his speech.

Eyton went through a list of Canadian companies like Pratt Whitney, Bombardier and Magna that are already doing strong business in Russia.

Export Development Canada (EDC) officials announced last year they facilitated $750 million worth of business in Russia in 2006, which marked a 50-per-cent increase over EDC's 2005 activity in the Russian market.

A news release noted this also mirrors Canada's overall trade numbers with Russia. Canada exported more than $870 million to Russia in 2006, an increase of 54 per cent over 2005.

This is in addition to a 41-per-cent increase in 2005 over 2004, following year-over-year increases of 27 and 30 per cent for 2003 and 2002, respectively.

The 2007 EDC news release projected more than 600 Canadian companies were doing business at the time in Russia.

Eyton says that like Canada, Russia is a resource-rich land.

But it eagerly wants to broaden its economic base to include other areas.

Several eyebrows went up during his Economic Club speech when he mentioned the country's 13-per-cent personal income tax rate and a growing GDP.

"It is only natural we fear what we do not know or understand. The Cold War ended almost 20 years ago. The Russian government realizes it needs to be more open to businesses.

"With all the reforms they have put in place, we are just past the tipping point on the up side," says Eyton.

John Place, a lawyer with Heenan Blaikie in Toronto, has helped broker deals between Russians and Canadians.

He left midway through law school in British Columbia to visit Moscow and ended up staying for a year.

His current business card lists his contact information on one side in English and the opposite side in Russian.

"It was a great experience that I will never forget," he said in an interview. "This is a country that fascinated me so much. They have made significant legal reforms with entire new parts of their civil code and criminal code; the introduction of jury trials."

Place says the state of the Russian legal system is "far stronger" than the perception outside the country.

Despite this, however, he admits the country is still plagued by some corruption.

"It's more at the level of the traffic cop giving someone a ticket out on the street. This isn't really an issue that affects big business," he explains. "What's most interesting is that recent (court) decisions have gone against Russian state authorities and sided more with business.

"Any Russian business strategy cannot involve rushing around or being in a hurry. It takes time to form relationships with key strategic partners and talk to local governments," Place says.

Late last month, a team of senior Scotiabank officials was in Moscow for the official opening of their "representative office," which was to serve as a springboard for expansion of trade services and correspondent banking services across the region.

The office would also represent other Scotiabank business lines, including ScotiaMocatta and Scotia Waterous.

ScotiaMocatta deals in trading of precious metals and finance while Scotia Waterous works in global oil and gas mergers and acquisitions.

Scotiabank's move brings the tally of its international acquisitions over the past four years to 17, at a time when Canadian banks, stung by recent North American problems like the asset-backed commercial paper scandal, are starting to look at hedging risk by expanding their global exposure.

"Our presence in Russia makes Scotiabank the only Canadian bank, and one of a select few globally that have an on-the-ground presence in each of the BRIC (Brazil, Russia, India, China) countries," Alberta Cefis, Scotiabank's executive VP and group head of global transaction banking, said in a news release.

Three employees currently work in the Moscow representative office, with two of them already having past experience working for the bank in Canada.

"With this office, the bank will expand its trade services and correspondent banking businesses across the region. Russia, Eastern Europe and the Commonwealth of Independent States (CIS), including Kazakhstan and the Ukraine, are currently served through Scotiabank offices in Toronto managing trade finance opportunities, and ScotiaMocatta in London, England, for precious metals services," Cristian Mandachescu, Scotiabank's VP of trade finance and financial institutions, said in a statement.

A Scotiabank economics report last November, written by the bank's Pablo Breard, noted Russia was already a "key emerging-market economy in global energy markets."

But "as the world's single largest producer of oil and gas, policy actions adopted by the Russian administration might cause ripple effects across developing markets," Breard wrote.

Piotr Dutkiewicz, director of the Institute of European and Russian Studies at Carleton University in Ottawa, suggests Canadians look at Russian opportunities for themselves and not believe what they read in the international media.

"Don't believe what you read in the press. Go and see Russia for yourself. There is a new president that just came to power who is a new, dynamic, 43-year-old. He is one of the best- prepared presidents among the G8 nations."

Dutkiewicz says he has met with Russian President Dmitry Medvedev and his popular predecessor, Vladimir Putin, several times in recent years and plans another trip to the Kremlin later this year.

Medvedev was officially inaugurated on May 7.

Putin had endorsed Medvedev as his personal choice prior to the election and has gone from serving over six years as president to the lesser role of prime minister in Medvedev's government.

Despite stepping down, many observers still wonder who will actually wield the most power in government now - Medvedev or Putin.

"Political experts widely anticipate that Vladimir Putin will remain at the centre of Russia's political power for many years to come," Scotiabank's Breard observed in last November's economics report. "Although such a scenario does not bode well for the development of solid political institutions, the removal of electoral uncertainties provides a sense of investor-friendly policy continuity."

Other analysts were holding off on making predictions. "It's still way too early to tell," says Dutkiewicz. "Putin's trademark was stability and economic prosperity. That's what he will be remembered for the most. But he also kept a tight grip on his government's power.

"With this new president, his biggest task will be modernization. He needs to develop small- and medium-sized business in the country and put his own mark on history," he adds.

"Will he (Medvedev) be a shadow of Putin? We'll just have to wait and see what happens."

(David Hatton can be reached at hatton@businessedge.ca)