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UK needs to look more closely at Russian investment
Published: 26 September, 2010, 10:22
Edited: 01 October, 2010, 15:07
TAGS: Investment, Markets, Oil, Russia and the global economy
Prince Michael of Kent says that British firms should look closer at investing in Russia, but the UK ambassador says Britain doesn’t water down legal issues for commercial expediency.
An oil and gas refinery owned by a small English firm in Russia’s south was destined to fail – the company lacks top-level connections. The project’s in an unfamiliar region and the Russian government is wary of foreign investment in energy, creating ‘strategic sector’ restrictions that choke interest. The plant also needs connection to the national gas network, which the federal antimonopoly watchdog admits Gazprom has little incentive to open to third parties.
But on Tuesday, Prince Michael of Kent, the patron of the Russo-British Chamber of Commerce still opened the plant on schedule.
“The whole view of England towards Russia is a very foggy one. And unless you come, as I have been lucky enough to do over the years, and see for yourself how they work, you don’t really pick up very much of an idea.”
The plant is a rare success story. Russian funds took in a laughable $100,000 investment for the week to Wednesday. Rival emerging economies Brazil gained $58 million, India $303, and China $502 million. Western corporations may salivate at the riches in Russia’s window, but they remain scared of coming in.
And the situation with Russia’s top foreign investor now threatens to get worse. New British Foreign Secretary William Hague unveiled a tough new international code of conduct last week, saying human rights will be at the core of UK foreign policy.
In an RT interview, Anne Pringle, the United Kingdom’s ambassador to Russia insisted she’ll press Moscow over issues like the murder of Alexander Litvinenko and Britain’s refusal to extradite Boris Berezovsky, even if it damages trade between the two states.
“On issues around a murder case, extradition, we do not water down our issues for political or commercial expediency. That remains our position, and the Foreign Secretary supports that.”
Russia’s leader Dmitry Medvedev says he wants more Western investors, but sweeteners such as tax breaks and equal access to infrastructure so far remain thin on the ground.
26.09.2010, 10:21
Nord Stream charges towards phase 1 completionThe first phase of the Nord Stream gas pipeline is due to be completed by next April with an international crew of more than 400 specialists working night and day laying pipe at record speed. |
27.09.2010, 10:38
3 comments
Greed and good still central to the tradeWith the second Wall Street movie hitting Russian cinemas this week, Business T spoke with Alexander Gerchik who spent ten years as a trader in the US about the balance between fact and fiction. |
The eight years in which Putin was President where more than anything driven by the need to guarantee National Stability (political union of the Russian territory and economic consolidation) Increasing oil price during those years did help to achieve those goals. Once the Russian Federation has been consolidated as a cohesive territory with a huge head around the Central district (40 million people and 30% of Russia´s GDP) it is the turn for social and economic development as Russian consumers, engeneers, doctors and nurses have not had the attention they deserved during the years in which structural cohesion of the territory was the first goal. International rankings about competitiveness demonstrate that the Russian Federation is in a low level of technical development (telecom usage, software) and corruption is too high compared to competitors. The good point is that Russia is among the BRIC countries the one where those conditions can improve more. Russia has resources and now the political will to undertake the necessary reforms to make a competitive nation from Russia. Among emerging markets it is the nation with more room for improvement as its level of competitiveness doesn´t correspond to its actual income per head and financial resources. Russia has lost many years in political disputes between Russians, and between Russians and neighbors (still it is necessary to solve the problem of Georgia, which has to be a peaciful neutral and independent nation like Finland, Sweden, Austria, Switzerland or Ireland) But once Natioanl Stability has been broadly achieved, the ground for R&D development has been established.
Just in the area of auto parts Russia is the first or second country with more space for growth as given its GDP and income per head it should manufacture at least 3 million cars like Brazil, and actually it just manufactures 1 million. That target will be achieved during the next decade without doubt. At the same time, 2 million cars mean an impressive investment in infraestructure, both private and public, and in high-tech (from GLONASS to software) Skolkovo´s R&D project in different areas, from energy efficiency to software, also means (if the project is successful) dozens of new companies will be born to develop the result of that research, and those start-ups will need capital, both from Russia and from other nations like the U.S., the U.K., Germany or Japan. The Artic also means a huge investemtn developing the new routes from Europe to Asia, and exploiting the new energy fields. And given the fact of Russia´s $450 bn. currency reserves and huge reserves of oil, gas and gold, investors can receive a guarantee no other country in the World can offer.
UK could warm up to Russia and start cooperating with it. It's in the interest of both countries.