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7 Jul, 2009 06:24

Presidential visit opens investment gate

President Obama's visit to Moscow has given the business community hope of better trade ties, with American companies announcing major investments into Russia.

The American-Russian business relationship has thrived in spite of, rather than thanks to, the political background. Now, businessmen hope that the meeting between Presidents Medvedev and Obama in Moscow can foster a new atmosphere, according to Edward Verona, Head of the U.S. – Russia Business Council.

“We are hoping that the governments will announce the formation of the intergovernmental commission announced at the April 1 meeting in London. It is important that there will be government encouragement of investment , also U.S. investment in Russia, and when there are difficulties which have been in the past, that the government can find ways of working it out.”

Business between the two nations is already picking up, despite the sometimes strained political ties. U.S. – Russia bilateral trade totalled $38 billion in 2008 – up 4 fold in just 5 years. Yet Russia accounts for just 1 % of U.S. international trade, while China account for 12%.

Some $1.5 billion worth of deals will be signed during the American President's visit to Russia, along with a 50/50 joint venture between aerospace giant Boeing and titanium supplier VSMPO Avisma. Pepsico has announced that it is planning on spending up to $1 billion on expanding production its production in Russia, and agricultural machinery producer, John Deere, will put $500 million into its Russian assembly operations. Samuel Allen, president of Deere and Company says the move will give John Deere access to the great potential of Russian agriculture.

“We continue to be impressed with Russia's agriculture and forestry sector. We provide modern farming solutions that can immediately contribute to higher productivity to help the agricultural sector realize its potential and we intend to use glonas, by 2010.”

Business representatives speak with one voice to governments for more predictable legislation. Mixed signals about Russia joining the WTO ahead of the Obama visit have reminded foreign investors about the lack of certainty that hangs over trade relations.