#10
TITLE: REMARKS BY ALEXANDER VERSHBOW, US AMBASSADOR TO RUSSIA, AT THE CONFERENCE "RUSSIA ON THE RISE", ORGANIZED BY THE AMERICAN CHAMBER OF COMMERCE IN RUSSIA AND THE EXPERT INSTITUTE
[RADISSON SLAVYANSKAYA HOTEL, 9:00, FEBRUARY 26, 2002]
SOURCE: FEDERAL NEWS SERVICE (http://www.fednews.ru/)

Somers: We're delighted that our first speaker this morning, Ambassador Alexander Vershbow, will address the changing the dynamics of the Russian-American political relationship. Mr. Vershbow became ambassador less than a year ago, having most previously been ambassador to NATO and intimately involved in the restructuring of NATO's mission for the post-Cold War period. He has shown a remarkable grasp of comprehending and acting upon complex business and trade issues, which I guess if you're dealing with missiles and other issues, is not that much of a leap forward, but we in business do think that our issues are complicated. We think we have no greater friend at the US Embassy than Ambassador Vershbow, and I mean both the Russian and the American business community. He is strongly behind the Russian-American business dialogue.

I now present to you Ambassador Alexander Vershbow.

Vershbow: Thank you very much, Andrew. And it is more complicated than missiles.

But I do want to thank the American Chamber of Commerce and the Expert Institute for this opportunity to say a few words about the new relationship that is emerging between the United States and Russia, and in particular the economic and business dimension -- how it fits in the larger picture. But let me make a few initial comments about the overall state of the relationship.

Unfortunately, there is a tendency to focus on our disagreements. To some extent, this is a legacy of the Cold War. The most recent manifestation of this sort of thinking are the many commentaries in the press, both here and in the United States, to the effect that US-Russian relations have taken a turn for the worse after a strictly tactical post-September 11th convergence of interests. With anti-terrorist operations in Afghanistan wrapped up, the argument goes, the basis for this so-called temporary alliance has largely disappeared and differences are allegedly taking center stage. The hullabaloo in this country surrounding the Winter Olympics has only added to the sense of gloom and doom and does cause all of us a bit of distress.

But I nevertheless believe that pessimism about US-Russian relations is completely unfounded. This isn't to say that there aren't differences between us. There are some, as there are bound to be in relations between any great powers with wide-ranging interests. We will continue to disagree in some areas, as is the case even with our traditional allies. I can say that from my experience at NATO. But focusing on what divides us misses the forest for the trees.

President Bush and President Putin have fundamentally redefined the relationship between our two countries since their first meetings in Ljubljana and Genoa last June, and they've put behind us much of the legacy of Cold War thinking. I believe we now have the basis for managing, if not resolving, our differences on the basis of what President Putin has called "logic of common interests."

The new post-Cold War US-Russian relationship is based on far more solid ground than just the need to fight the common enemy of international terrorism. It's founded on a more enduring interest in defending and extending the common values of democracy, the free market, and the rule of law. And this is more than rhetoric. I believe that Presidents Bush and Putin are committed to making our real-world political and economic relations reflect these shared fundamental values.

Since the first Bush-Putin meetings last summer, our countries have been expanding cooperation across a broad agenda. We're working on deep reductions in strategic nuclear arms. We're developing a qualitatively new NATO-Russian partnership. We're working to bring stability to the Balkans and other troubled regions of the world. We are expanding our economic ties and promoting Russia's integration into the World Trade Organization. So a lot of this was already underway last summer, and Russia's strong support for the anti-terrorist coalition after September 11th simply added further impetus to this positive agenda.

When our two presidents met in Washington and in Crawford in November, they agreed that the most effective way for the welfare of American and Russian citizens to be assured would be through a market economy, freedom of economic choice, and an open democratic society. In their joint statements on the new US-Russian relationship, the two presidents pledged to pursue these goals in part by expanding economic, trade and investment relations between our two countries. They recognized that doing this will require the elimination of legislative and administrative barriers to trade and investment, a transparent and predictable investment climate, and market-based economic reforms. All of these things will obviously be good for Russia, good for the United States, and good for relations between our two countries.

The key point is that government and the private sector must work together in both countries to achieve these objectives, and I think they are already making good progress in doing so.

The businessmen among you, Russian and American, are far more familiar than I am with the limiting effect on trade and investment that can be caused by legislative and administrative barriers to trade and by the lack of transparency in the business climate. The recommendations of the Russian-American Business Dialogue, which are currently being developed and will soon be formally presented to the two governments, are of very crucial importance, and I want to commend the leadership on the spirit of cooperation demonstrated by all four of the participants in this dialogue: the American Chamber of Commerce; the US-Russia Business Council; the Russian-American Business Council; and the Union of Industrialists and Entrepreneurs. We will certainly continue to work closely with you and with the Russian government in keeping with the commitment of our two presidents in order to eliminate the investment barriers that you have highlighted in your initial work.

I don't have to tell this audience that we have barely half the potential for trade and investment between Russia and the United States. Our trade still represents less than one percent of total US trade worldwide, and our $7 billion in directed portfolio investment is on par with US investment in Costa Rica. So that enormous potential for the growth that still is out there underlines the importance of dealing with the impediments to trade and investment as quickly as possible.

I think you can continue to count on the US government's commitment to promoting trade and investment. Our Commerce Secretary, Don Evans, has already been to Russia twice leading a business development mission on the second visit in October. Treasury Secretary Paul O'Neill, Energy Secretary Spencer Abraham, and our Trade Representative Bob Zoellick have also met with their Russian counterparts several times over the last six months to advance our agenda on a range of economic, energy and trade issues. The Prime Minister, Mr. Kasyanov, and Ministers Gref and Kudrin have all visited the United States to meet with their counterparts. And next month a US oil and gas trade mission will travel to Sakhalin, and a senior Commerce Department official will participate in an aerospace forum with US and Russian companies here in Moscow. So the work continues.

I'd also mention that the Export-Import Bank, the Overseas Private Investment Corporation, and the Trade Development Agency of the United States are promoting bilateral trade and investment through project assessment, project finance, and risk insurance. OPIC's project insurance and finance for Russia totals more than $425 million, and we will be increasing our funding for programs like the EBRD's Russia Small Business Fund in order to provide more financing for Russian entrepreneurs and to help Russian financial institutions provide such financing.

I'm pleased that Andrew mentioned the fact that our embassy is, and will remain, an aggressive advocate for American companies who have been subjected to unfair business practices, which have unfortunately done serious damage to Russia's reputation as a place to invest and conduct business. We are now engaged in a regular and productive dialogue with our counterparts at the Ministry of Economic Development and Trade in an effort to resolve these outstanding disputes, and we will continue to raise them as necessary with the Russian government at all levels. And in addition, we'll be continuing to work with our Russian counterparts to address issues of corporate governance, transparency, and fair business practices with a view to improving the business climate for Russian as well as American companies.

Now, trade promotion and business advocacy are, of course, just part of what's required to tap this huge potential that still exists for expanded US-Russian trade and investment. Banking reform is essential. It can be one of the key missing links in the Russian government's otherwise very impressive reform agenda to date. When they met in Washington, our two presidents called for the creation of a Russian-American banking dialogue, and this dialogue will, we hope, bring together the private sector's views and its recommendations on what's needed to build a vibrant banking sector in Russia. Clearly a safe, sound, competitive and transparent banking system will sustain economic growth here, particularly with regard to the still credit-strapped small and medium business sectors.

I mentioned Russia's integration into the world-based global trading system of the WTO, and that, too, is essential to building confidence in the climate for trade and investment between our two countries. We remain committed to working with the Russian government to accelerate its WTO accession. Our negotiators have met bilaterally on more than a monthly basis since September, and we expect the WTO to product its draft working party report on Russia's accession very soon, and this would be sort of the road map for the remaining steps Russia must take to complete its succession.

We've been very clear and consistent regarding the conditions for WTO accession. Russia will be asked to meet standards that are no less and no more than those asked of other countries. We'll not ask for "WTO "Plus," but neither will we settle for "WTO Light." Russia has to continue to make progress in deregulation. It must increase transparency, create a level playing field for Russian and foreign enterprises, and perhaps most challengingly, improve intellectual property rights protection.

Now, I should say that WTO membership does not mean that Russia needs to completely open every bit of its market. This is a common misconception here. What Russia does need to do is fully accept the rules-based system governing international trade that the WTO represents and offer improved market access for other countries, firms and products. This will help Russian exporting industries and improve the competitiveness of all sectors of the Russian economy, and the resulting growth will, in the end, benefit all Russian citizens. It will benefit us too because trade and investment is not a zero sum game. An economically strong Russia will be a more stable and capable partner with which the United States can cooperate on the political and strategic levels.

I think that a sound economic relationship between the US and Russia is, in many ways, the cornerstone of the broader new relationship that is emerging between our two countries. As Ambassador Bob Zoellick said last week in South Africa, free trade is about freedom; it's about economic liberty; and it's about political liberty. All these things are interconnected. And the United States government is committed to working with the Russian government and with the private sectors of both countries to expand the frontier of shared economic interests. These shared interests will, in turn, strengthen the basis for cooperation across a broad spectrum of issues and establish a relationship that will allow us to work together and resolve not just today's problems, but the many problems that we will face together.

Somers: Thank you, Ambassador Vershbow, for that insightful commentary from the perspective of the US government on the Russian-American economic and political relationship.

BACK TO THE TOP    #195 CONTENTS