Time to Get Down to Business With Russia

MOSCOW -- A new chapter in the U.S.-Russian relationship opened yesterday as a senior team of Bush administration officials began two days of talks here aimed at cementing our economic ties for the long term.

To be sure, the top priority for the relationship is developing a new strategic framework for peace, as both presidents Bush and Putin confirmed on Sunday at the G-8 meetings in Genoa. That also is why Condoleezza Rice, President Bush's national security adviser, is joining Treasury Secretary Paul O'Neill and me here.

But to further our relationship, as President Bush has suggested, it is important to get more American and Russian businesses involved in our bilateral discussions. Thus, we are supporting an initiative of the business communities in both countries to create an American-Russian Business Dialogue, which will provide a valuable means to improve communications between the business communities of the two countries and present a business perspective to the two governments. In response to this initiative, we are announcing today that the president has asked me to lead a business mission of American business owners to Russia in the fall.

I'm eager to bring this group to Russia to look for new business opportunities. For all American enterprises, with particular emphasis on small and medium businesses, conditions within Russia and abroad have become more favorable for Russia's integration into the international economy. Surging global flows of goods and services, capital and people, ideas and technology are opening new opportunities for economic growth and social advancement. With the proper policies, Russia can tap into this global economy.

To its credit, Russia has achieved a degree of macroeconomic stability and has adopted a more responsible approach to its international debt obligations. It has taken important steps in establishing institutions necessary for a market economy. Much more needs to be done, of course, but a more favorable economic environment, a talented economic reform team and a cooperative working relationship between the Duma and President Putin have improved the prospects for further reform.

I believe we have a window of opportunity to build the U.S.-Russian economic relationship as recent market reforms by the Duma and President Putin take hold, including reductions in business and personal taxes and a law allowing joint energy production deals with foreign companies.

America is already Russia's number one foreign investor with more than $5 billion in direct investments -- one-third of the total -- and $10 billion in two-way trade of goods and services. But these numbers are only a small fraction of what they could be, considering the hundreds of billions of dollars in capital flows and trade with our other European partners. We can do better.

Clearly, there are big challenges when doing business in Russia. For one, Russia needs to do more to build a better environment of trust at all levels. It is my strong belief that trust is the fundamental basis for our future success. Trade missions are a good start, but new business opportunities don't translate into much if people don't trust the system enough to take advantage of them.

There must be courts, laws and regulations that are transparent -- a due process system one can trust -- to attract foreign investors or create new businesses and new jobs. And ethical business practices and good corporate governance are vital.

The U.S. Department of Commerce has been working with Russia on many of these issues, developing codes of conduct and streamlining customs procedures. But much more needs to be done.

I hope the Business Dialogue can help build mutual knowledge and understanding between members of the American and Russian business communities. Participants in the dialogue can seek consensus on the development of institutions that must underlie trust in business relations, such as good business practices and corporate governance and effective commercial dispute resolution mechanisms.

We are also working with Moscow as Russia seeks membership in the rules-based World Trade Organization. This is important, because WTO accession would reinforce economic reform and rule-of- law initiatives in Russia's domestic economy. WTO membership would also strengthen Russia's links to the global economy. Of course, any WTO accession package will need to meet the appropriate commercial test, but the United States is prepared to continue to work with Russia toward this important goal.

Trade and economic reform are, of course, about more than material wealth. They're a moral imperative, as President Bush says. They're about advancing democratic values and political stability, human freedom and social responsibility. The key to Russia's economic future is to unlock the potential of the Russian people, and this can be accomplished by strengthening the institutions that underpin democracy and the market economy.