A Deal with Russia

Remember when the previous occupant of the White House tried to pressure the president of Ukraine into a deal? The self-described greatest dealmaker did not succeed in the art of a deal with the former member of the Union of Soviet Socialist Republics, ex-sovereign state and current Russian pawn. All the then-occupant of the White House got out of it was his first impeachment.

Thirty years earlier, another U.S. president—the U.S. president of Pepsi-Cola, that is—did make a deal with Ukraine.

Well, the story really begins way back in 1959, at the legendary “Kitchen Debate” between then-Vice President Nixon and Soviet Premier Nikita Khrushchev. As part of a U.S. and U.S.S.R. cultural exchange, the American National Exhibition in Moscow, featured American products: cars, art, fashion, and an entire model American house. (Russia had its own exhibition in New York City earlier that year.) Sponsors of the U.S. exposition included Disney, Dixie Cup Inc, IBM, and Pepsi.

Nixon made headlines in the U.S. after he and Khrushchev, surrounded by reporters in front of an exhibit of an American-style kitchen, argued the relative merits of communism and American-style democracy. After their verbal sparring, Nixon led Khrushchev to a booth featuring Pepsi-Cola and introduced the Soviet leader to the fizzy sugar-laden drink.

Fast forward to 1972. Richard Nixon was president and Pepsi-Cola became the first “capitalistic product” allowed into the U.S.S.R. Pepsi held a cola monopoly in the Soviet Union until 1985.

Unfortunately, the Russian ruble was worthless in the international marketplace. Not so unfortunately, Pepsi took payment in Stolichnaya vodka and became the U.S. distributor for the popular spirit.

In 1989, Pepsi made a side deal to take seventeen old submarines and three warships as payment from Russia. Pepsi sold them for scrap. Pepsi also took payment in new oil-tanker ships which they leased out or sold. Pepsi was allowed to double the number of its soft-drink plants and introduce Russians to Pizza Hut, a Pepsi subsidiary. The following year a new agreement included ten new ships in the payment to Pepsi.

The implosion of the Soviet Union in 1991 imperiled Pepsi’s assets. Several ships were still under construction in Ukraine, which wanted a piece of the sale. So Pepsi-Cola negotiated a new deal with the newly-independent state.

Meanwhile, Coca-Cola was making inroads into Pepsi’s second-largest market outside the U.S. Coke eventually surpassed Pepsi-Cola’s sales in the former Soviet Union.

And Ukraine? It is thoroughly under the thumb of Russian President Vladimir Putin.

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