Business looks for stronger business ties between Russia and US

Turning Russia’s economy into modern innovative powerhouse is closely tied to relations with the US, as business and government leaders meet at the Economic Forum in St. Petersburg.

Politically relations have been reset, but from an economic view point it still a little cool between Russia and the US. $18 billion of trade turnover and some $7 billion of mutual investment show that there's plenty of room for growth, according to Yaroslav Lissovolik, Chief Economist at Deutsche Bank Russia.

“There's tremendous potential in boosting bilateral economic ties both in the trade sphere and in the sphere of investment. One of the issues that is consistently raised by the Russian side is the Jackson – Vanik amendment which is seen as a barrier to boosting trade ties between the two countries.”

John Faraci, the CEO of International Paper, which runs several paper mills in Russia, agrees that relations are underdeveloped. He says investors are keen to come but they lack confidence and are afraid of all the red tape.

“The transparency of regulations, the consistency of regulations, make the investment, nothing certain, it’s puts Russia on a more level playing field with the rest of the world. But it’s good to see the dialogue, our experience is that Russia has come a long way when IP came in 1999 but the world is becoming more competitive and Russia has to compete for that foreign direct investment.”

At a time when innovation and modernization have become watchwords, Russia is keen for the US to contribute – be it financial or intellectual. The much talked about innovative cluster in Skolkovo would be almost impossible without the expertise of residents of the original Silicon Valley. Elvira Nabiullina, Economic Development Minister says the Russian government will do its best to provide attractive conditions for investors.

“The government is conducting a systematic job in trying to improve the investment climate – we have picked out several key areas. First of all its better migration terms for qualified personnel, reducing red tape, facilitating the tax and customs regime.”

Russia also wants the US to speed up decisions on its accession to the World Trade Organisation. Russia has spent a record – 17 years – waiting to get into the WTO and it should come as little surprise that Moscow reached out to it’s local partners, Kazakhstan and Belarus, to create its own Customs Union. But nonetheless joining the global organization remains a priority.