U.S. President Barack Obama’s visit to Russia has seen over $1.5 billion of company deals unveiled, but a longer term step-change in business between the nations will depend on Moscow boosting the rule of law
“We need the confidence that things are going to remain stable, that the ground rules are going to remain stable,” Samuel Allen, chairman of U.S. farm machinery maker Deere & Co., told reporters while announcing an investment of $500 million into Russia within the next five to seven years.
“I believe in the long run that is what the (Russian) government will try to do but at this point in time things are not as stable as we would like to see. It makes us hesitant at times,” he added.
On the other hand, the remaining illusions the Obama administration held for cooperation with Russia on the Iranian nuclear program were thrown in Secretary of State Hillary Clinton’s face. Stronger sanctions against Iran would be “counterproductive,” said Russian Foreign Minister Sergei Lavrov, just days after President Dmitry Medvedev said sanctions were likely inevitable. This apparent inconsistency should remind us that Mr. Medvedev is little more than a well-placed spectator, and that Prime Minister Vladimir Putin, who discounted sanctions in a statement from Beijing, is still the voice that matters.
This slap comes after repeated concessions—cancelling the deployment of missile defences in Eastern Europe, muted criticism of Russia’s sham regional elections—from the White House. Washington’s conciliatory steps have given the Kremlin’s rulers confidence they have nothing to fear from Obama on anything that matters.
And nothing matters more to Mr. Putin and his oligarchs than the price of oil. Even with oil at the range of $70 a barrel, Russia’s economy is in bad straits. Tension in the Middle East, even an outbreak of war, would push energy prices higher. A nuclear-armed Iran would, of course, be harmful to Russian national security, but prolonging the crisis is beneficial to the interests of the ruling elite: making money and staying in power.
If the U.S. is serious about preventing Iran from getting a nuclear weapon, then Obama must get to the point and state the penalties unequivocally. Repeating over and over that it is “unacceptable” has become a joke. For more than 10 years a nuclear North Korea was also “unacceptable.” If Mr. Obama says the U.S. will do whatever it takes to prevent Iran from attaining a nuclear weapon, then we will see if Tehran blinks. At a minimum, the White House should publicly promise that any attack on Israel with weapons of mass destruction will be treated as an attack on American soil and urge NATO to make a similar commitment.
Additionally, on the first day of Obama’s three-day visit he met with Russian President Medvedev in an open meeting after which the doors were closed for several hours of one-on-one negotiations. As a result a number of agreements were reached. Significant steps forward included a nuclear arms agreement signed by both Presidents, which reduces their nuclear arms by as much as a third and an agreement on the US missile defence system plans for Poland and the Czech republic that have been a bone of contention for some time between the two major powers. Although no definite compromises were reached – Obama stated that his staff are researching the issue and will present an assessment in two-three months based on which a decision will be made – one breakthrough of value for Russia was achieved: defence systems were linked to attack systems. An agreement valuable to the US involves military transit to Afghanistan via the Russian airspace.
However, many disagreements still exist between the two leaders, one of the biggest ones concerning Georgia and the status of its break-away regions of South Ossetia and Abkhazia. Nevertheless, both Presidents seemed satisfied with the day’s work and expressed renewed hope and optimism that the two countries would finally enter an era of cooperation after many years of cold animosity.
Observers expected that Obama’s visit to Russia will enhance the U.S.-Russia relations and help boost bilateral trade, which stood at $36 billion last year.
The Kremlin said Russian oil major LUKOIL wanted to invest in a new refinery on the eastern U.S. coast with ConocoPhillips.
“If we have success on the geopolitical side of the summit we are going to see much more investments by U.S. companies,” Andrew Somers, president of the American Chamber of Commerce in Russia, told Reuters in an interview.
“We hope that President Medvedev will be able to follow through on his continuous campaign to improve the rule of law. I think this is a single biggest inhibitor to investment by U.S. companies, their concern about the rule of law,” he said.
U.S. executives regularly name the weak rule of law, high level of red tape, and corruption as key obstacles for doing business in Russia.
PepsiCo announced that it would boost investment in Russia to $4 billion from $3 billion in the next three years. Besides, Boeing will launch a venture with the world’s largest titanium producer, Russia’s VSMPO-Avisma, industry sources said. The venture will produce $700-$900 million of titanium for Boeing’s planned 787 Dreamliner.
In addition to Boeing, John Deere, and PepsiCo, executives from U.S. oil majors ExxonMobil, Chevrov, ConocoPhillips and aluminium major Alcoa travelled with Obama to negotiate for new agreements and investments.
By Ahmed MorsyDownload