Foreign Minister Sergey Lavrov’s remarks at a meeting with the International Council for Cooperation and Investment at the Russian Union of Industrialists and Entrepreneurs (RSPP), Moscow, April 19, 2019
Ladies and gentlemen,
First of all, I would like to thank the President of the Russian Union of Industrialists and Entrepreneurs, Alexander Shokhin, for the opportunity to speak before such a representative audience. I’m pleased to see many familiar faces here.
We appreciate your willingness to work in Russia, which is backed by concrete practical actions. I will not list them as you are more aware of them than anyone else. As regards the foreign policy framework of your activity, we appreciate the fact that you try to objectively inform your governments about what is happening in Russia, including in the economy and more.
Mr Shokhin mentioned the ongoing dialogue between Russian leadership and businesses. Over the past six months, President Vladimir Putin has met with the German Committee on Eastern European Economic Relations, the business community in Italy, Turkey and the United Kingdom and, yesterday, France. The Foreign Investment Advisory Council is very active and is led by Prime Minister Dmitry Medvedev. Thank you for noting my contacts with the business community. Since the beginning of this year, I have met with representatives of German and American businesses, as well as members of the Association of European Businesses. Just a few days ago, I took part in the Russian-Arab Business Council and the Arabia-EXPO International Exhibition.
All this suggests that we have a mutual interest, and our frequent contacts confirm this. The interest in strengthening and diversifying our trade and economic ties has been growing for more than one year. Trade with the EU reached almost $300 billion last year. This is far from a record high, but is already significantly more than several years ago. Our trade with China has exceeded the milestone of $100 billion. Trade with the United States increased by almost 10 percent and with Japan by 17 percent. These are good numbers.
A similar situation pertains to investment. As of the end of last year, British companies accumulated investments totaling $23 billion in Russia, German companies $20 billion and French companies $18 billion.
We are doing our best to create the most favourable conditions for doing business in Russia. As Mr Shokhin said, we are leveling the field for doing business for Russian and foreign companies. At a meeting with French entrepreneurs yesterday, President Putin noted that Russia had risen to 31st place in the World Bank's Ease of Doing Business rankings, thus outpacing several G7 members.
I believe we will continue to take consistent steps to create a comfortable investment climate. Clearly, stability is very important for business. It is connected not only with the rules governing business activities in a particular country, but also stability in the international arena, which is obvious. We strive to conduct the most constructive and unifying foreign policy. Indeed, it is, above all, focused on creating the most favourable external conditions for our internal development, technological advancement and improvement of the well-being of our citizens. Our foreign policy also aims at providing the best conditions for cooperation with our foreign partners on a mutually beneficial basis in all geographic areas.
I will not spend a long time discussing how the illegitimate unilateral sanctions being imposed in circumvention of the UN Security Council hamper progress on this path. Most of these sanctions are imposed under far-fetched pretexts along the lines of “highly likely” which has already become a byword. Sanctions are being used more and more often as punishment for a country’s incorrect political behavior; by the way, this does not apply to Russia alone. They are also used as a method of unfair competition. This serves to explain the trade wars, the exterritorial application of national laws and the flagrant abuse of the US dollar’s status. In the long term, this will negatively affect this currency because everyone understands that it is unreliable, at least given the current conditions that have evolved on global markets due to the US position. The losses incurred total hundreds of billions of dollars. Suffice it to recall the losses sustained by French and German companies and banks for cooperating with Iran. They only violated US laws, not international rules or their own laws. The Americans forced them to pay many billions of dollars in compensation for violating US laws. Statistics are not the only thing that matters. Most importantly, mutual trust is being undermined, and this hampers long-term economic planning and forecasts, including long-term strategic joint initiatives.
The energy sector serves as an example. What is happening around the Nord Stream 2 pipeline is a source of serious concern. Members of the European Commission initially received legal findings that Nord Stream 2 did not violate the European Union’s gas directive in any way. After that, the European Commission did everything possible to introduce amendments to this document. These amendments stipulate backdated rules for investment that has already been made. In effect, they completely ignored the “grandfather clause” which, until then, was perceived as an unshakeable rule of civilised regulation of economic activity.
The United States blatantly interferes in the process of implementing the Nord Stream 2 project. Suffice it to mention public statements by US Ambassador to Germany Richard Grenell who simply demands that the German Government modify its position and act contrary to its own interests.
Of course, we wish there were more situations when we and our partners try and find a balance of interests, and move beyond unilateral accusations to dialogue. I know that the Russian Union of Industrialists and Entrepreneurs enthusiastically volunteered to help promote the implementation of the agreement on establishing the Consultative Business Council reached between President Vladimir Putin and US President Donald Trump in Helsinki last year. As a follow-up to this agreement, our side submitted corresponding proposals and candidates to this Consultative Council; however, no response from American businesses has followed since. As we understand it, there is another political taboo against implementing what the presidents had agreed upon.
I would rather not dwell on the existing issues. You know about them, perhaps, even more, as you face them on a daily basis while implementing your own plans and projects. It is important for us to learn from the situations that create artificial barriers as well, to learn how to overcome them and develop mutually beneficial cooperation. As is known, our economy has its own complications, but it is managing to overcome the consequences of illegitimate unilateral restrictions and adapt to the volatility of the global environment. We place emphasis on strengthening national production capacity and diversifying our foreign relations. Within the framework of our national projects, we will carry out large-scale investments in very high volumes. This includes investing in industrial sectors, infrastructure, the social sphere. As you know, foreign businesses are welcome to partake in these initiatives. The decision is, of course, yours.
We also have good prospects as regards Eurasian integration. This year, the Eurasian Economic Union (EAEU) marks its 5th anniversary. In late May, this organisation will hold its regular summit. I think that over five years the EAEU has established its foothold and proved its importance. Last year, the aggregate GDP of the EAEU member states grew by 2.5%, mutual trade increased by over 9%, and trade with third countries grew by 19% and reached almost $120 billion. Efforts have been made to create a large common market of commodities, services, capital and labour. A basis has been created for including education, science, healthcare, tourism and sports in the integration agenda. All these initiatives are being implemented in close contact with businesses, which probably benefit from unified regulatory rules more than anyone else.
We are working to expand the EAEU’s external relations as well. The agenda includes creating a flexible integration contour which Russian President Vladimir Putin has designated as the Greater Eurasian Partnership. Under this partnership, participants will be able to boost their economic potential by expanding interaction in practical formats of mutual interest. In particular, we encourage developing links between EAEU member states and the Shanghai Cooperation Organisation (SCO), the Association of Southeast Asian Nations (ASEAN), and other countries and associations on the vast Eurasian continent.
The EAEU has already signed an agreement on a free trade zone with Vietnam and an interim agreement with Iran. Talks are underway with Israel, Singapore, Serbia and a number of other partners across the world.
I want to make special mention of our joint efforts with China to link the EAEU and the Belt and Road initiative. An agreement has been signed on trade and economic cooperation between the EAEU and the People’s Republic of China. The plans also include greater use of transit opportunities, including those of the Northern Sea Route. A week ago, Russian President Vladimir Putin, while addressing The Arctic: Territory of Dialogue International Arctic Forum in St Petersburg, emphasised that we will make serious efforts and put considerable resources into developing this national transport artery, and secure its more efficient, stable and safe use.
We welcome the first contacts between the Eurasian Economic Commission and the European Commission. The European Commission was not very eager to engage, primarily for political reasons, as we were told. It was also explained to us that our European partners do not recognise the EAEU as an equal partner in dialogue. This is not right and needs to be overcome. It is gratifying that now the European Commission has entered into contacts with the Eurasian Economic Commission to a considerable extent owing to Germany and a number of other countries. So far this only concerns technical rules and regulations, but still these are practical issues. As we develop relations at this level, we will definitely see opportunities to return to the initiative of creating a common economic space from Lisbon to Vladivostok. This concept is a natural fit in the philosophy behind the Greater Eurasian Partnership. Again, all countries situated on our continent, without exception, will stand to gain.
We will do our best to provide favourable working conditions for you here, irrespective of political vagaries. I expect that pragmatism and common sense will prevail in the end, and the opinion of the business community will be fully taken into consideration when building interstate relations, which will only benefit the joint efforts to address existing global problems and conflicts. Current efforts to overcome them are seriously complicated by signs of political confrontation in how the West approaches the Russian Federation. I’ll also point out that your activities have a direct impact on people’s well-being and, as such, can do more to create the right conditions for promoting a positive agenda and overcoming various anomalies.
Thank you very much. At Mr Shokhin’s suggestion, let’s have an interactive session.