[Deb Palmieri on Russia Table of Contents] The following article was published in the Russian Commerce News, September-October 2000. The Russian Commerce News is the official publication of The Russian-American Chamber of Commerce®. |
As we go to press, weeks before the November elections, it is important to reflect on the importance of the moment. The U.S. presidential election is the final benchmark event many investors have been waiting for to end the wait-and-see standoff on investing in Russia. Most recently, it started with the August 1998 financial crisis, that sparked the collapse of Russian economy, and international investor confidence. Then it was waiting for the phase-out of Yeltsin's final term of office and making sure stability remained intact. Then it was the wait, albeit a relatively short one, for the resulting process of electing the next Russian president, Vladimir Putin, a fate sealed last March. Then it was waiting to observe the new policies of a new Russian president, and hoping he would deliver in key areas of reform, such as an improved tax code, a commitment to combat crime and corruption, and mostly to put the teetering economy on a stable trajectory. Few would disagree that on these points, Mr. Putin has delivered, in a way that has substantially improved investor confidence in Russia.
Since the political backdrop has historically played an important role in either stimulating or hindering U.S.-Russian/Soviet economic relations, many have awaited the consummation of the U.S. presidential election to set the stage for a four year period where two youthful presidents, one from the American side (either Gore and Bush), and the other from the Russian side, will evaluate bilateral policies of the past, (both successes and failures) and chart a new course for the future. This course holds important implications for the American business community seeking to expand trade and investment ties abroad. Under the right set of circumstances and policies, our trade and foreign direct investment with Russian could increase in a meaningful way, beyond the limited levels of today.
Or, economic activity could continue to be held hostage to political imperatives and Washington politicians seeking ongoing linkage policies which tie the commercial activities to external foreign and domestic policies and outcomes.
There are hopes and dreams that many in business would wish for from both sides. From the American side, it would mostly be for predictable Washington policies towards Russia, voicing support for commerce, free from the daily ups and downs of political life to pursue the cornerstone of life under freedom and democracy: free markets and free market development. It would be for less government involvement and political regulation and interference in the free market process. This is instrumental for future American competitiveness in the global economy. And it assumes, of course, close cooperation with government on commercial projects and endeavors that have a bearing on national security interests. Government and industry need a more operational set of rules and guidelines to establish norms and expectations for commercial activity with Russia so that such activity does not become politicized and subject to arbitrary, spur-of-the-moment sanctions or restrictions during times of diplomatic tension or standoff.
From the Russian side, investors would love to see the continuation of a commitment to reform weak institutions and implement principles which will strengthen investor confidence - contract enforcement, the rule of law, and the elimination of arbitrary processes which foster corruption and unfair processes. Investing capital is risky, and to the extent that investors can predict risks, control for them and engage in predictable processes when disputes arise, is the extent to which foreign capital will flow to Russia. Important signals to investors? Stemming capital flight is one. If domestic money has no confidence to stay in the country - why should foreign money take substantial risks? Crime and corruption is a major factor deterring the perception that Russia is attractive for investment. When Putin's anti-crime policies demonstrate effectiveness, this will signal an improved investment arena. It will also be useful for Russians to understand that international public opinion significantly affects investor decisionmaking - and perceptions (whether they are realities or not) of heavy-handed rule, constraints or infringements on individual liberties or freedom of the press can only harm the cause of investing in Russia.
The future of U.S.-Russian economic prosperity rests on these hopes and dreams. . .and more hopes and dreams ahead.
Deborah Anne Palmieri
Russian Commerce News, September-October 2000
Copyright 2001 The Russian-American Chamber of Commerce®