H

ow changes on the Russian political scene, which have taken place as the result of the parliamentary elections on the eve of the new year, can affect business and influence Russia’s relations with its main economic partners? Andreas Masurkow and Yevgeny Khokhlov of Eurasian Metals put this question to doctor
Andreas Meyer-Landrut. He is one of the prominent Western diplomats and the former German ambassador to Russia, who still maintains close ties with our country.
A.M-L: The fact that both "Yabloko" (Apple) and the Union of Right Forces (SPS) failed to get over a five percent barrier and will not be represented in the parliament caused anxiiety in the West. Those parties, which have won seats in the new State Duma (the parliament’s lower house), are focusing more on the priority of national interests than on Russia’s integration in the world’s economy. Many observers are now asking the question of what direction Russia’s policy will take. I am sure that questions like this will be raised at the forthcoming consultations of the Big Eight and other international meetings. It seems that president Putin also does not regard the election results as being optimal for Russia: the president directly said that on December 18, when he was answering on TV questions by Russian citizens. As far as I understand it, the president as well as the parliament’s leaders are already looking for ways to provide the right wing forces with a place at the political stage.

EM: Shortly before the parliamentary elections president Putin had a meeting with chancellor Schro..der and representatives of Germany’s big business. The Russian president was calling upon them to significantly expand business contacts. How this appeal was received?
A.M-L: This dialogue, which was held in Ekaterinburg, was not the first one. These discussions are not limited to economy. They deal with a considerably wider range of problems: their agenda includes policies, questions of developing a civil society, cultural exchanges. It is only natural that along with businessmen politicians and public figures also participate in them.
Economic relations can be discussed at such meetings in general terms only. For example, it is quite possible to talk about high customs barriers, the extent, to which the investment climate is favorable for investing the German capital in Russia’s economy. But, roughly speaking, the real business activity depends precisely on the kind of an agreement between given firms on both sides. As you understand, deals are not made at "high forums". That is why these forums do not have much importance for developing daily contacts, although personal meetings and new business acquaintances can, of course, contribute to such a partnership.

EM: How do you assess today’s level of the economic relations between Russia and Germany as well as changes that have taken place in the past decade?
A.M-L: As is known, Germany lives mostly at the expense of its export proceeds. For us Russia is not only the largest but also the nearest potential market geographically. After quite a few countries of the former East Block, including Poland, join the European Union, Russia will naturally become an even closer trade partner of our economic system.
As far as changes of the last decade are concerned, in my opinion, the most important achievement has been the unquestionable availability of the political stability in today’s Russia. Second, there is a circumstance of no less importance: in the past years the country’s legislative and legal base, which covers, among other things, the area of taxation, has been established. And German businessmen feel very positive about it.
Unfortunately, among remaining major shortcomings there are still problems of the widest spread of corruption and insufficient stability of the legal system. Precisely these two negative aspects complicate very much activities of Western entrepreneurs, who decided to start business in Russia. That is why despite solid volumes of the bilateral commodity turnover between our countries, there is still an enormous potential of untapped opportunities. If, for example, you take the total volume of Western investments in economies of other former East Block countries and compare it with the similar index for Russia, then, it turns out that they are just incommensurable.
In all times and under any circumstances the investment capital serves as the most sensitive barometer for determining "weather" in any country. Meanwhile, there are some "nuances" that keep putting Western and, of course, German businessmen on guard with respect to Russia. In this connection I recall one good comparison of the German capital with the German roe. This animal is famous for its intuition: when you see this deer even far away in the forest, it will immediately run away, if it starts feeling something suspicious.

EM: It is a really good comparison. Though it is not quite clear precisely what dangers are waiting for the cautious German "roe" wandering off in the Russian "forest"?
A.M-L: Human factors still continue to play a large role in bilateral contacts. Germans are very strict when judging Russia. It seems to me that they often are even severer than people from other countries in the West.
Just one simple example: the German economy has invested and keeps on investing astronomic funds in Brazil, although it has also lost there colossal sums of them. Or consider the situation with China, where, as is known, there are considerable political problems, particularly with human rights. Nevertheless, my fellow countrymen are not exactly embarrassed by the investment climate in these regions of the world.

EM: Let us go on with your observations. Precisely the German media reacted with the peculiar anxiety to the events related to the oil company YUKOS. There were assertions that Khodorkovsky’s affair was hurting the Russian reputation in foreign policy and that it would undermine the country’s market system, possibly, throwing it off back to past decades. Do you agree with such an interpretation?
A.M-L: Probably, there is no single answer to this question. I am familiar, of course, not only with critical opinions of the German media but also with president Putin’s statement that judicial collisions because of YUKOS were not politically tinted and that they had nothing personal. At the same time, actions by Russian General Public Prosecutor’s Office with respect to the so-called oligarchs still look like being selective. In addition, I would like to cite the following widespread opinion: by putting a person behind bars in a democratic country the prosecutor’s office must produce in the shortest possible time the absolutely concrete proofs of the detainee’s guilt. If, as a result of this case, "the mountain (the General Public Prosecutor’s Office) gives birth to a mouse", Russia’s image in the West will indeed suffer a considerable damage.

EM: At the same time, it is no secret to anyone in the West that Russian reforms were accompanied by the unprecedented pace and extent of the capital concentration in the hands of the negligibly small (from 5% to 7%) stratum of the society. Now this new elite controls about 80% of the country’s national property. How different the reaction to actions of delinquent ’oligarchs’ might be?
A.M-L: With the truly revolutionary transition of Russia from one social system to another it was probably hard to avoid such a result. These facts, of course, cannot be dismissed. What is more, it is very important to note that in the last years president Putin has taken real and tangible steps to normalize the social situation. Efforts are being made to put in order payments of pensions and salaries to the military personnel, doctors, teachers and other employees in the state sector.
So, the hope is that those people, who earned big moneys during the "perestroika", stop taking them out of the country. By making investments in the national economy they could contribute to its progress through creating new jobs for their fellow countrymen and ensuring that their wages would let them get at long last beyond the limits of "basic cost of living". That was precisely the way that the present-day capitalism developed in most Western countries, including post-war Germany: progressing from the small stratum, which accumulated capital, to, subsequently, its much wider distribution and the formation of the middle class on this basis.
It seems to me that new laws passed by the Russian parliament, particularly in the area of taxation, are favoring small and middle-sized businesses. Such a large country as Russia, of course, is still chronically lacking such new businessmen. I see one of the reasons for this in the insufficient maturity of the banking system. That is because any entrepreuner, who starts his own business, needs bank credits. But it is rather difficult to obtain them in Russia on normal terms. Although I should admit that a certain progress has taken shape. When I visited Russia eight years ago, rates on credits reached 100%. These days you can find a bank that gives loans to business structures with annual rates of 15% or even 12%.

EM: We want to cite, without naming sources, a typical opinion: "Largely, the big German business does not care who precisely it is dealing with in any specific country". Such concerns as Siemens, Ruhrgas, Krupp, Daimler-Chrysler felt themselves confident enough in Russia in all times: under Brezhnev, Gorbachev, Yeltsin... What is more, the larger the extent of state control over economy is, the easier business deals are. Did you personally encounter such an entrepreneurship "philosophy"?
A.M-L: It goes without saying that the ways of cooperation with state structures of the former USSR, which sunk into oblivion, were much simpler than they are now, when you have to deal with dozens, hundreds of firms and enterprises. Nevertheless, giants of the German industry, such as Siemens and Ruhrgas, are buying and selling in Russia today considerably more than in the Soviet times. But I would like to stress once again: the present volumes of mutual commodity turnovers are considerably smaller than they might be with already existing opportunities. For us Russia is the chief market. And I am sincerely sorry that in the past we did not learn how to fully use the colossal mutual potential.
In addition to reasons that we have already mentioned, such as corruption, imperfection of the judicial system, extremely cumbersome bureaucracy, there are still problems of psychology. And the matter is not even in the notorious difference of the German and Russian mentalities, which, in my opinion, is considerably less perceptible than, say, between Germans and Frenchmen. Mutual misgivings and prejudices inherited from the times of the cold war still persist. On both sides, on the part of Russians and on the part of Germans themselves... But precisely the psychology, i.e. the mutual trust, ensures 50% of success in any business venture.

EM: So far Russia’s aspiration to join the WTO and have closer relations with the European Union does not get any noticeable support from both Germany and France, the largest and most influential partners. This is especially catching the eye because of recent statements by leaders of nations of the Southeastern Asia, who unambiguously spoke in Russia’s favor. How do you explain this restraint?
A.M-L: I do not follow the details of the negotiations on the WTO and that is why I cannot make comments with enough competence. I think that the attitude to this process at the political level is by no means negative. At the same time, integration in the world economy and subsequent activity in world markets on the basis of the WTO standards mean that the Russian economy is becoming not only equal in rights but also open to competition from the outside. And this is not a simple problem at all. Many branches of the Russian industry are still not competitive. And if customs barriers are lowered and the market gets cheaper high-quality goods (for example, automobiles), their prospects can turn out complicated too much.
It is necessary to go through certain stages and make weighted decisions. The most important thing is to ensure that the Russian economy itself will not suffer too much when swallowing such a dish as the WTO. On the other hand, it should be recognized that the establishment of the perfectly adjusted relations within this global organization is far away. In particular, special privileges for some countries and economic sectors are still preserved. Like subsidies for Europe’s agriculture, for example. In these negotiations Russia is also defending certain opportunities to protect its economy during the transition period. As far as I understand it, this is precisely the case in point now. Therefore, this is the question of the judicial and economic nature, not of the political one.
Berlin-Moscow