Russia offers foreign investors a quicker return on their money than China and that won't change when President Vladimir Putin retires next year, said Andrew Somers, head of the American Chamber of Commerce in Russia.
There'll be „continuity” in economic policy under Putin's successor, so foreign investor shouldn't be deterred, said Somers, a corporate lawyer who lobbies on behalf of Exxon Mobil Corp., Citigroup Inc. and more than 800 other companies. „Hesitating and waiting isn't going to help,” Somers said in an interview in Moscow today. „Russia is an engine of growth for American companies, there's no question about it.” While Putin has been criticized for consolidating power over Russia's regions, Somers said a new generation of Kremlin-appointed governors is opening the hinterland to foreign investment and the kind of returns unheard of in neighboring China, the world's fastest-growing economy. „Companies tell me they're making money here and making it much faster than they could in China,” said Somers. „There's a much more business-like approach among some of the newer governors. And if you want to be a major player here, you have to go national.”
At the same time corruption is a growing problem. In the past few years „three to four blue-chips” approached AmCham for advice after being pressed for bribes, said Somers. „I was surprised at the brazenness of the extortion and the amount,” said Somers. The issue was resolved after AmCham intervened with the proper authorities, he said. „The energy sector is now problematic, but overall we don't anticipate any significant change in the direction of the economy after the election.” Somers, who has headed AmCham for six years and has a master's in Russian history from Columbia University, uses direct contacts with Russian ministers to plead the case of foreign investors. He has also championed the cause of Russian membership in the WTO, which the country has been trying to join for more than a decade.
Somers takes partial credit for US President George W. Bush's blessing of Russia's WTO bid in November. Shortly before the St. Petersburg summit of the Group of Eight nations in July, AmCham, in a letter signed by executives of 13 US companies, appealed to Bush to give speedy US approval. Russia, the world's largest economy outside the WTO, has been trying to join the trade group for more than a decade. The main sticking point from the US side was intellectual property rights, Somers said. Russia's entry into the WTO is now „difficult but feasible” by the end of the year. „Now you have some positive momentum. You want to use that before it dissipates,” Somers said. Presidential elections in the US and Russia next year could put a brake on a full normalization of trade relations between the two countries. The so-called Jackson-Vanik amendment of 1974, a Cold War-era bill that restricts US trade with former Soviet republics, will need to be repealed upon Russia's WTO entry, Somers said. „If Congress doesn't, not only will the US be in violation, but US companies will be legally prohibited from taking advantage of Russia's accession to WTO,” Somers said. „Every other country will get the benefits.” (Bloomberg)