tv World Apart with Oxana Boyko RT August 11, 2013 6:29am-7:01am EDT
we often hear that since the united states is the largest consumer of energy and russia is the largest producer of energy the synergies between the two are obvious but i do you really so obvious the may not be obvious but there is great center g. already not just in energy but in many other sectors of the global economy where americans are investing in russia making a lot of money and expanding their operations this is a completely different world in the geo political world that we read about and business is focusing on making money but whether we look at the trade between the two countries and last year it was just under forty billion dollars it's not so impressive and if you compare that to the trade with china for example which was more than ten times larger. you know it could be argued that one of the reasons for so much geopolitical bickering that we've seen over the past year or so is simply because the two countries don't have that much to lose. well i think you are on
a very profound point the better the trade relations and the more commerce the risk between each country the more they have to lose if they get into a geo political spats and that's where i believe the u.s. administration is its strategy is to focus on trade and investment because quite frankly i'm not a government person not speaking for the government but russia is russia the u.s. is us this history i think there's always going to be different perceptions of how the world should be so we're going to have these up and down spats but the more business there is the less chance there is that this geo political arguments will effectiveness i think again over the past year or so over seen some very profound examples of geopolitics of the acting business in a very significant way and i think the magnitsky act in the preceding discussions in congress was. a very fair revealing point in the bilateral relationship
and i know that in this country people are quite aware that americans may have suspicions of russian russians and that's fine but some of the speeches that we're heard in the congress back down were really outlandish in terms of overall negativity and backwardness i know that you had to testify in the congress at that time did anything great your ears everything you said that's a fact what happened after that x. or so and a multi-billion dollar deal with russia will dumbs multibillion dollar sale to pepsico was not. turned around is continuing to prosper i could go on and on about the many investments that have been made since the incidents you talked about because business is interested in what predictability will it be in the economy what kind of welcome or access is there to him by the government and what is the potential for the economy and russia is very high on the list of major american
companies and there are many other companies who are looking at the regions and is the regions where we are focusing our emphasis to american companies because regions are under the radar screen so to speak of the geo political federal issues and that's where the businesses and that's where the growth is i think it could be argued that these negative stereotypes that are still persistent within some parts of the arab political and lead damaging. the interest of american companies in russia too are comparable extent your the red tape and corruption that american investors are so fearful of i wonder if there is a need to work not only with the russian government and the russian officials as you've been doing for the last twelve years but also with the american political establishment with the same goal of improving russia's business climate or rather the perception of that business climate it's a good question and
a fact that's what we did for two years before russia was accepted into w t o where once a month over the delegation of american business heads in russia to washington to meet with congress and we didn't lobby about jackson granik we didn't lobby about magnitsky we presented the basis for them to make a rational decision on w t o by talking about the success of investment in russia that's one way we have talked to the russian the us government there's no discrimination against american business have been here for almost thirteen years and we went through the georgia conflict and now we have discussion on other issues . and yet we never see never feel that american company loses out to a company a company from another country because of the geopolitical spats and i think it's important to stress that it's not only in the interests of russia to have those investors here but it could be also beneficial for the investors themselves because a lot i've read you saying that stability and returns and russia are actually
higher than in china because the russians are spending a higher share of their disposable income or less part of it know so because russia has less restrictions for example in repatriation of profits the russian government is pretty liberal in letting companies take their profits so there's very little foreign exchange control in china is a different story another reason russia you can commune here and operate in a sense like a free market the russian government is not your partner in certain very strategic sectors you you need to have a russian partner who's doing. interest by the government if you take energy for example but the great majority of it investments here you come in you operate as if you're in europe or the united states and in china those are the case you got to have a choice basically a chinese government quarter so there's different in the profitability for most many companies in russia is greater than in china even though china sales are
higher the profit margins here are much greater now coming back to the need ski act that upset so many. people here in russia especially politicians i don't know if you are aware of that but it was a common practice in the soviet union to sell high quality high demand goods in a package for something that was much less desirable and i think the u.s. congress sometimes uses the same tactic and they might need to act was i think an example of that because the united states did grant russia permanent normal trade relations but. there was a catcher is in the parish with these active created a lot of drama now if you try to put those emotions aside how has this package affected the bilateral relations in a practical sense. it hasn't in a practical sense affect the relations in the business except as i pointed out
earlier there may be companies i'm sure there are companies in the us who hold back because of this this controversy but you know you have an adoption law now that is creating significant emotional reaction in the us i'm not saying who's right or wrong all i'm saying is both countries do things. that exacerbate the situation and the reaction in the adoption law is very very very strong emotional and the not talking about congress i'm talking about many americans who want to adopt russian kids who know somebody who's adopted a russian kid so you know it happens at both peppers and both countries and it's unfortunate but you know that's what i think or what he said about that is certainly true and not only for the united states but for russians all there was a lot of. dissatisfaction there and russia but i think it all comes down to the golden rule where you are so treated the others you want to be treated oh where did
it start when i don't know or you're saying it starts in the us and you point to a big bill that was a couple years ago so nothing before that and i think this is a persistent dynamic between the two countries and i would like to ask you how do you really break it because i think both countries sort of got into the habit of treating each other as a safe object for you know scorn and criticism even when it's not exactly the war the only way you can break it is really what both governments are doing and that is to emphasize more and more trade more and more investment more and more dialogue between business and have business have an influence on the government and the government looks at the numbers you talked about the low trade but you know trade isn't everything like these trade figures. sometimes get to me because it does not coat the billions of dollars of money in american money that's gone in the ground in russia to create factories and to create exports for russia that's not in the
trade numbers russia is not a trading nation now except in the minerals or less weight is they can compete with china which produces a lot of you know consumer goods because they have for a whole bunch of reasons you have to look at the whole complex and also when they figures talk about x. country a white country is investing more in russia a lot of that is american investment that goes into american subsidiaries in germany or elsewhere and that is counted as german investment so our trade our business relationship with russia is much stronger than many of the figures that you see and that is the way to balance or create some kind of harmony at the upper levels of government now last year russia became a member of the n.w. it's your and as one implication of that that the country will have to lower in part time zone on growth and many foreign goods including america. is
a turly to us as the. changes that have happened there within the economy and all maybe even in foreign trade as a result of that accession. i think it's a little a little too early to tell i think without being able to prove it i think the fact russia is in w t o is going to have a very beneficial long term even medium term effect on the attitude of american companies who are not yet investing in russia so w t o to me has a very positive long term effect on russia and when there are disputes it will be disputes in a commercial judicial sense it normalizes russia in the in the perception the perception of russia by outside investors that finally has a chance of getting to your they say nothing personal it's just been in business type of relationship you know business relationships are personal i know what you're talking about nothing personal but nothing personal can have a negative effect too because. people can do bad things and say hey it's nothing
personal but i just took your company is just business and i know you don't mean that and i'm talking about personal because i've found that with russian business the personal relationship is very important they have to trust you and that's probably true in many countries most countries america you want to trust also but i find something particularly deep in the russian character if i can talk about that it's whether or not you can trust the other person whether the other person comes through and then you look at the contract and then you do all of the other things that are required so the personal is intertwined in in the business relationship as well and that's why you can't do business here from the u.s. you want to invest you've got to come here you've got to set up an operation you've got to slowly not only get to know the the environment but to have the russian counterpart know you as a person well we'll continue discussing our russian american relations just after a short break.
it's. it was terrible. the city was on fire nobody knew what was happening. five days without a break we were terrified. and there was no communication only tanks all around us we came out to find georgian democracy in our streets. that any one of us could have left straight away but we knew that our first duty was to defend our
homeland now that we've had peace since two thousand and one of the places reviving and coming back to normal since april twentieth twelve i've been the president of the republic of south ossetia i'm very pleased to see that all people are so positive about building and strengthening our country's state. we live in the city and we love it up putting everyone loves his homeland right you know we didn't expect to live through five years of such peace and quiet. there's no war. but if your whole life should be. the face of life you know.
pleasure to have you with us here on our team today i'm sure. welcome back to worlds apart where we're discussing love to hate relationship between russia and the united states with andrew summers president of the american chambre of commerce mr summers and one of the. risks that is often cited with regards to d. in business and russia is the lack of predictability and when you look around the world i think the global context for predictability has changed dramatically over the past year or so if you look at some of the countries that are considered stable before it's herky brazil in. may they don't seem that for libel and stable anymore
so would these global instability try and make russia a bit more attractive for foreign investors a yes it will because the unpredictability that also exists in russia to a certain extent is becoming less unpredictable or russia's becoming more predictable because certainly in the past three or four years the predictability factor has increased in russia. russia has conforming more and more to international standards everything from product manufacturer to how disputes are resolved in the regions is the key the governors in the in the best regions the administration's or very focused on being global to improve their regional economies are in competition with each other they become very very professional they can match any state in the united states some of these administrations in terms of how they not only market their region but how they follow through on their commitments and the more american investment in the regions the more that happens
the more americans are telling their counterparts back in iowa nebraska new york hey i have an investment in this region region is a great example because the predictability quotient as increasing difficulty because of the administration now you mentioned this a couple of years ago there was this perception that everything in russia depends on the kremlin and. i think. you said at that actually a publicly several times that russia still suffers from this image problem with regards to you on arbitrary administrating for a link. in other words investors still fear that somebody will come and come confiscate that business and i wonder how many members of the american chamber of commerce had something like that happen to them and recent years well first and the last point very very few of those can happen but they're very rare instances in the usually in the very strategic sector but in terms of the group the vast majority of
our members have not had that experience but what companies are still concerned about it is a legitimate one there's less confidence among investors about the integrity and quality of the court system again it's improved significantly even officer the great job in the supreme arbitration court or commercial court the tax court is free of corruption. americans when most of the cases in tax disputes but on an overall basis there's the there still needs to be significant improvement in the legal system particularly when it comes to rulings by judges on property rights and others there's a lot there's still a long way to go and as we tell people in the united states the last thing you want to do is get into court even in the u.s. takes a lot of time you pay lawyers all kinds of money so there's a lot of practical reasons to do everything you care to invest in russia without resorting to the court system now charles robertson chief economist at renaissance
capital south publicly that one of the deterring factors for foreign investors in russia was put in selection for the third term which in he's view kills any whole four major structural reforms institutional reforms and as he put it also kills any hope for novelty in the russian politics and i think it's like the old marriage the lama what's you want most to know your novelty better i guess you country have both or at least you can five both in russia or russia is trying to have both and so are many other countries. just referring to the election. that meant stability and business or stability more than anything ok and that was granted by the selection i could not find it many businesses who complain about the results ok that's just a fact of life that's the way business works things and yet there were government here's the leader is looking very seriously and working very hard to produce
innovative products to make russia russian industry more innovative in scope is not the only example of this we have the economic zones which are using every means that they can legitimately to attract innovative foreign companies into russia and to support innovative russian companies and we're seeing more and more examples of medium sized russian companies which are very innovative signing contracts with major global american companies to transfer the transfer technology but they're innovative techniques to american companies and american companies are doing the same thing so you can't look at russia just as stability there's a serious drive on innovation here that i think is taking hold now it just mention the small project and innovation and those are considered bad projects of pay here previous president medvedev and of what what he wasn't in office both the american political establishment and sound western commentators were a bit more positive on russia they even initiated the so-called relationship reset
that some would argue is now barrett was put in is back in power and. what surprises me is that these two men always stressed that they have similar views that you know they have pretty much the same team working for them but the reception all of them in the west was was different and i wonder why what is so different between them because they always trust the similarity and the common values that they share these two leaders have been partners it is a senior partner in a junior partner they're working well together and they have different. constituencies in terms of what their tasks are as i see it from outside with thirty of us focusing on innovation is focusing on. rule of law and think that the these kinds of issues i wonderful grist for the press for commentators
because they look at personality and they look at you know what does all this mean but from a pure a business point of view it's working for foreign investors let me ask this a little bit more poignant i do think there is an anti putin bias in the united states yes i do why do you think exists first of all i don't think it's huge and it's almost universally among those who are not investing here and have no interest in russia and never come to russia and why it exists is because i think he will back to the cookie go back to the hangover from the cold war putin wants a strong russia the elements in the u.s. government that consider american interests first which they should they want to strong russia to because the stronger russia is the more stable it is the greater the economy is that's an enormous opportunity for american business american trade
so the u.s. a low there is an anti putin bias within some segments in the us the thoughtful people want to strong russia that's not an anti putin basis and it's very hard to find anyone who's met with him. one on one or a groups business who doesn't come away very impressed with his knowledge the fact that he studies the issue and that he's a very good interlocutor a major issue and that's a big plus i think in the american media president is often characterized as belligerent and a cult citron that this is the word that seems to pop up a lot when you look at the recent events in particular the snowden affair what surprised me in russia is that not only did he miss a chance of. thumbing his nose at the united states and some people here in russia were disappointed i mean i think they would have and enjoyed seeing america and america not humiliated but at least. criticized not only.
didn't he do that but he also sad that he doesn't want snowden to you harm the interest of american partners and let's be fair russians are not called partners in the united states all that often so i wonder if he's being belligerent at times maybe pragmatic at some other times and maybe bowl. maybe both ok he's a politician he's a leader of a great country. the leaders use different terms at different times that suit them suit the situation but if you take a soden affair from a business perspective we don't care about it because despite these things you're talking about it's not affecting investment decisions now you mentioned that the business climate has been improving but obviously investors still complain in any country would like to see a bit more. tender loving care from the air receiving government that's not
surprising. despite all that combat complaining that we heard and reason here isn't just political disputes it seems to me that they're the investments ont actually falling there they're not growing either but essentially they're they're stable they're flatline is that correct i think they're up a little i don't have statistics that i believe because the counting comes from many different sources all i can do is tell you about the continuing stream of american companies who are investing in russia or who are come in just this year in the first six months haven't invested yet would have made the decision to invest as long as they understand how the how the system works and these are big big companies companies one hundred years old in the u.s. that are still global powers had never been here before come in here this may or june and they basically got in principle to resume to invest up to one hundred million dollars this is
a continuing flow that they come to us because they want us to brief them and let them know about the environment and again it's the regions where you can go in you're basically keeping your head down from the geo political as to dispute and most of the investments now are basically depended upon the the decision of the regional government as far as i understand you're going to step down at the end of the year and you're going to be become a consultant but i think as we've discussed before this is pretty similar it's you . foreign investment as well if this is what will be consulting for basters and mother are not invest in russia and commerce and one of the leading business dailies here in russia speculated that one of the reasons for you to change your career was as they put it better earning approaching riches for investors in russia so after all it's not that gloomy and you can make a descent living as an investor in russian. well you know it consulting is not
investing it's very closely connected because the clients of the consultants are investors but you can't just tell people to invest so you can earn money you can't tell people to do something that you don't believe and i strongly believe in the future of russia with all of the issues we discussed because i've lived through it for twelve or thirteen years it is getting better and better so i think that what i will bring to the party here in this situation is to provide. advice from someone who american understands the russian market understands pretty well the russian government and can give very objective advice not only about the russian market as a whole but as region so yes there's a connection to it between investment there may be times when i say don't invest in this region or you know it depends on the situation that lets me answer my final question you partially already answered given your experience here in russia and your extensive connections in this country as well all what do you think are some
of the criteria some of the factors that make. a successful investor in this country other any specifics is there any special knowledge that people have to have in this country in particular and you have to understand and accept the special relationship that exists between two former superpowers one of whom is no superpower and who had great conflicts geopolitical you have to understand that's part of the the soup if you are part of the recipe and secondly is you have to have an appetite for the risk reward equation russia has risks so do other countries have risks so you know if you're if you're a sophisticated investor if you just look at the different countries and what are the rest. and can i handle them and what's the reward if i manage the risk that's
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