The US-Russian Business Council earlier this month presented a report card to US President George W. Bush and his Russian counterpart Vladimir Putin on the state of trade relations between the two countries. Energy remains a key issue in that relationship.
The USRBC is a Washington, DC-based trade association that represents the interests of about 300 member companies, including several US majors. The report is part of a formal business-led initiative, called the Russian-American Business Dialogue (RABD), that the two world leaders inaugurated at their July 2001 Genoa, Italy, summit.
The latest RABD report updates a May 2002 assessment. It suggests that while there has been some progress made over the past year, much more should be done. The new report gives both governments high marks for diminishing bilateral trade and administrative barriers, but it stresses that there are "ongoing concerns that require effective government action."
The concerns are many. "Significant" visa problems remain in both countries, for example. And the report highlights industry's ongoing frustration with the glacial pace of Russian judicial and banking reforms. Energy companies also complain that Moscow's current "rule of law" does not protect foreign or domestic interests, with the end result being both US investment and Russian oil revenues are vulnerable to corruption.
"Without a strong banking system and effective capital markets, Russian savings cannot be channeled into promising investment. The economy will remain overly dependent on extractive industries and the rents earned from them. Progress in banking, as well as capital markets and pension reform, will boost the economy's structural ability to support long-term planning horizons for savings, lending, risk, and reward," RABD said.
Conciliatory comments
When Bush and Putin met in St. Petersburg, Russia, June 1, they both said past differences on Iraq will not dampen trade opportunities between the two countries.
"Strange as it may sound, despite all the differences between our two countries around Iraq, we did not only manage to preserve and maintain our personal relationship but also to preserve our mutual cooperation and interaction between our two countries, and even strengthen it," Putin told reporters at a joint press conference with Bush.
"The United States and Russia are working together to ensure that Russia's energy sector can fulfill its potential in world energy markets," Bush said.
Other partners
It is also clear that Russian energy companies do not want to rely on the US exclusively to realize that potential. Last month Russia and China signed a joint declaration calling for cooperation in the energy sector. One of the first deals to come out of that announcement was a $150 billion oil supply arrangement between Russian oil major OAO Yukos and state-owned China National Petroleum Co.
Russia will supply oil starting in 2005; the deal includes a $2.5 billion, 2,400 km pipeline from Angarsk in Western Siberia to China's "oil capital" of Daqing (OGJ Online, May 30, 2003).