British trade and investment official Andrew Cahn gave an interview to RIA Novosti on bilateral trade and disputes, Russia's investment appeal, and the future of economic ties under a new Russian leader.
Over the past five years, trade between Russia and Great Britain has more doubled, to reach $16.5 billion.
With the steady rise of British investment into the Russian economy, now at $26.3 billion, Britain has become Russia's largest investor. In 2007 UK exports to Russia reached an all-time high of 2.8 billion pounds, an increase of 36% on 2006.
According to the Russian Ministry for Economic Development and Trade, there are currently around 400 British companies operating in Russia.
On his visit to Russia, Andrew Cahn, the Chief Executive of UK Trade & Investment, told the RIA Novosti correspondent Narine Prazyan about the latest trends in trade and economic relationship between the two countries.
- How would you assess the current state of trade and economic ties between Russia and the UK? Could you say a few words on the major joint Russian-British projects?
British-Russian commercial relations are very good. Trade flows are expanding rapidly in both directions. Investment is increasing rapidly, primarily British investment in Russia, rather than the other direction. But I would like to see more Russian investment in Britain. So I would characterize the trading relationship, commercial relationship as excellent. We can do better. I'd like to see it expand even more rapidly. Some of our competitor countries do better, Germany, for example. So it can be better, but it's good. Surprisingly, the more troubled political relationship doesn't seem to have affected the commercial relationship. We've been having some significant cooling of relations at the political level which I regret. And I very much hope that it will turn out to be a temporary thing. But the commercial relationship has remained strong. There has been a continuation of the deepening the relationship between our economies. That's a good thing.
- Great Britain is the leading foreign investor in the Russian economy. Could you specify major sectors that particularly attract UK companies in Russia?
That's very important. Let me emphasize the fact that Britain invests more in Russia than any other country in the world. That is a proof of our commitment to Russia, our belief in the Russian economy and the global nature of our companies. As for the sectors, clearly, oil and gas leads the way. There have been our major investments - from Shell, from BP and TNK-BP and, of course, quite a lot of other smaller oil companies. The oil and gas sector is absolutely key, and we remain committed despite the difficulties that there have been - with Shell, with the Sakhalin investment, TNK-BP and its investment, there had been real difficulties but those companies remain committed to this market and we as a country remain committed to the oil & gas sector. But there are many other sectors where, I believe, we can contribute. ICT could be a good example. Infrastructure development is important. It's clear to me that Russia needs to invest very significantly in many aspects of its infrastructure. It's power generation, it's power distribution, railways, roads, and those are areas where we can contribute. Water is an interesting area. Britain has huge expertise in water management and it's clear to me that access and utilization of water resources and then managing wastewater is going to be one of the big issues for the decades to come. And we can help Russia with that. So there are many sectors where we can work together. At last, I would mention education. Britain has the best universities in the world, and we welcome Russian students.
- Russia was once considered by foreign investors as having a risky economy and unstable political situation. Has anything changed now? Do UK investors and businessmen consider Russia a reliable and stable partner, or do the stereotypes remain?
- Well, some of the stereotypes are stereotypes because they are true. I would still characterize Russia as a high risk - high reward place to do business. Things have gone better. The legal code is improving, enforcement of the law is improving, degrees of corruption are reducing, and the ability of companies to get on and do business free from interference is improving. So all the trends are in the right direction. And everything that your incoming president Medvedev has said is encouraging. But it is not the same doing business in Russia as it is doing business in Germany or doing business in America. So there is still room for improvement.
- Do you agree that the Russian government is exerting pressure on foreign companies working on the Russian market, trying to push foreigners out and dominate in the energy sector?
- The Russian government has said that there are certain strategic sectors which it considers to be particularly sensitive and where they retain the right to determine the investments being made and what happens. Oil & gas is one of these strategic sectors. So, of course, the Russian government itself says that it wishes to interfere in these sectors. I would argue that they would do better not to interfere because the marketplace would work more effectively. But Russia is a sovereign country, you can do what you want, you have your policies. As long as the policies are clear, are stated openly and are properly enforced, it's fine. As long as we know that the rules are fairly enforced, that's fine. But my own belief is that it would be in Russia's interest to minimize the number of sectors where political influence is great.
- How would you comment on the latest row concerning TNK-BP? What's your view on the reasons for it?
- I think that's a matter for TNK-BP to deal with the Russian authorities. I don't want to speculate on what the causes are. What I do know is that TNK-BP wishes to work constructively with the Russian authorities, to find a solution to any of the problems which exist. And I'm confident that the solutions will be found. And I know that BP, a global British company, remains committed to the Russian market and committed to finding solutions in a constructive way.
- Does the UK business community expect any changes, any new opportunities for cooperation after the inauguration of the Russian president-elect Dmitry Medvedev, as compared with Putin's presidency?
- Well, I think Mr. Putin has overseen a strong commitment in Russia to developing the marketplace and making Russia a more business-friendly location. I'm very appreciative of all that has been done over the 8 years of Mr. Putin's presidency. I believe that the things that president-elect Medvedev has said are very encouraging. We wait to see what he actually delivers but I believe if he can follow a path of market-based commercial development it will be beneficial for Russia and beneficial for foreign investors.
