European Union foreign ministers met over the weekend to discuss the sanctions, which are up for renewal in January, when Trump will also be inaugurated as president. These sanctions have hit Russia’s economy hard after the West aimed to punish Moscow for its annexation of Crimea and intervention in Ukraine.
In 2015, Russia’s economic growth contracted by 3.7 percent. The International Monetary Fund estimates the world’s largest oil producer will see a further GDP shrinkage of 1.2 percent this year. An International Monetary Fund (IMF) report cited “structural bottlenecks and the impact of sanctions on productivity and investment” that will hurt the country’s recovery, though higher oil prices are providing some relief.
Dmitriev hopes the sanctions will be lifted, but he expects the Russian economy t0 grow even if they aren’t. However, he said, ending the punitive measures “will be the right thing to do and will create a sense of trust that is needed between Russia and the U.S.”
Russian President Vladimir Putin has said he hopes to build trust and improve relations with the U.S. when president-elect Trump takes over in January. Russia looks forward to “their good personal relationship,” Putin spokesman Dmitry Peskov said in a recent interview with the Associated Press.
Dmitriev is perhaps even more optimistic, positing that a Trump presidency is great for his country and a “huge opportunity” to “reset Russia’s relationship with the U.S.” He added, “Just as the previous one didn’t work, we hope that this one would. And we’re very impressed by President-elect Trump’s position that he wants to have good cooperation with Russia.”
He insisted Russia wants to be a “good partner,” saying “with President-elect Trump, there is a possibility to work jointly between Russia and the U.S. on issues like fighting terrorism and to make sure that our economies continue to grow as we provide access to each other to our markets.”
Based on the IMF’s projections, Russia’s economy will return to growth, of a scant 1 percent, in 2017. Dmitriev believes the country has reached a macroeconomic stability and that steadying oil prices will aid the recovery.
In reference to getting foreign companies to invest in Russia, Dmitriev said, “There’s huge opportunities to make very good return in Russia. There’s a partner like the RDIF to invest in Russia with. We believe that’s why lots of our partners are investing with us. We invest quite a bit of money with UAE, Japan with China, with Korea, with lots of other partners.”
The RDIF has also invested in venture companies like the visionary high-speed transportation system Hyperloop One. “We are one of the investors hoping that Hyperloop will transform transportation in the world,” said Dmitriev. “We’d like to invest more in the U.S., and we believe we and our partners will achieve lots of synergy by investing in the U.S.”
Dmitriev argued that RDIF is “quite independent” from the Russian government. “All of our investment decisions are independent, and we invest with our partners, so we need to make a joint investment decision. The government doesn’t tell us what deals to do and what sectors to invest in.”
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RUSSIA JOINS THE WTO
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Trade picture
- Russia is the third trading partner of the EU and the EU is the first trading partner of Russia.
- Trade between the two economies showed steep growth rates until mid-2008 when the trend was interrupted by the economic crisis and unilateral measures adopted by Russia, which had a negative impact on EU-Russia trade. Since 2010 mutual trade has resumed its growth reaching record levels in 2012.
- EU exports to Russia are dominated by machinery and transport equipment, chemicals, medecines and agricultural products.
- EU imports from Russia are dominated by raw materials, in particular, oil (crude and refined) and gas. For these products, as well as for other important raw materials, Russia has committed in the WTO to freeze or reduce its export duties.
- The EU is the most important investor in Russia. It is estimated that up to 75% of Foreign Direct Investment stocks in Russia come from EU Member States (including Cyprus).
The European Union and Russia have a strong trade relationship. Bilateral trade and investments continue to grow rapidly.
Since 1997 the Partnership and Cooperation Agreement has been the framework of the EU-Russia relations, regulating the political and economic relations between the EU and Russia. One of the main objectives of this agreement is the promotion of trade and investment as well as the development of harmonious economic relations between the EU and Russia.
The new EU-Russia Agreement - currently under negotiation - should provide a comprehensive framework for bilateral relations with stable, predictable and balanced rules for bilateral trade and investment relations. It will focus on improving the regulatory environment by building upon the WTO rules and strengthen bilateral trade relations. The negotiation of this New Agreement with Russia started in 2008. The negotiations have been stopped in 2012 because no progress could be made in the Trade and Investment part. Today with the deepening of the Customs Union (the European Economic Union since 2015) between Russia, Kazakhstan and Belarus (joined by Armenia and Kazakhstan in 2015) and the difficulties for Russia to fulfill its WTO commitments, it is not clear how further progresses can be achieved in the Trade and Investment field and in general with the New Agreement.
The EU was a strong supporter of Russia's WTO membership since the start of the process to the actual accession on 22 August 2012. Russia's WTO membership will give a major boost to further development of the economic relationship between the EU and Russia and it will also prevent Russia from adopting unilateral tariff hikes as has been the case in the past. Two years after the accession of Russia to the WTO, Russia is still not respecting all its WTO commitments. The EU will use all the available instruments (bilateral and multilateral) to make sure the WTO rules are respected as it is a key element to improve in the long term the trade and investment relation with Russia.
Russia and WTO membership
On 22 August 2012 Russia joined the WTO. This is good news as- it will bring down the level of Russia's import duties to a more reasonable level, thereby improving market access for EU businesses, including service providers,
- it will facilitate investment through a more predictable legislative framework.
- it will also have a gradual positive impact on Russian business as it will improve investment conditions and competition on the Russian market.
- Russian consumers will gain from both lower prices and increased quality due to competition.
To make sure that the benefits of Russia's WTO accession are realised, it is important that all the commitments are implemented correctly. The EU as a strong supporter of the multilateral regime will work towards this goal.
