Thursday, January 21, 2016

The argument that Russia-U.S. trade and economic relations have no solid foundation has long since become commonplace. However, such statements are far from reality. Our business cooperation still has a certain base, since for many years we’ve been a major importer of U.S. grain and poultry, and these factors have always weighed in on our political relations.

Even now, despite a significant drop in bilateral trade, there are several areas that haven’t been affected by the sanctions, and where our cooperation is fairly broad. The aviation industry is one such example. Russia is the largest supplier of titanium to Boeing and Airbus. In addition, Russia is a significant market for Boeing aircraft, both used and new. Regarding titanium, we have recently moved from supplying raw titanium to exporting titanium parts and components, which brought our partnership to a new level.

We have good ties in metallurgy, which include not only Russian supplies of steel blanks to the United States, but also ​​investments. Russian companies buying US assets have opened doors to cooperation in the sphere of manufacturing high-quality pipes that are used, among other things, for producing shale oil and in other projects.

Space exploration is a traditional sphere of our relations. Let’s not forget that Russia and the United States top the world in this sphere. Not surprisingly, this area of our cooperation was not affected by the sanctions. This also applies to supplying Russian space engines to the United States and ISS cooperation. In addition, negotiations are underway to launch commercial satellites using Russian booster rockets.

Such American business juggernauts as Ford and General Electric are heavily invested in Russia. Unfortunately, some U.S. companies have decided to shut down their operations in our country, also because of the crisis on the Russian automobile market. However, I think that U.S. investments in Russia and Russian investments in the United States have good prospects.

In general, even though the sanctions have held back Russia-U.S. cooperation, they haven’t curtailed it. On the one hand, a serious blow was dealt to promising projects related to non-conventional oil sources. On the other hand, American business can still return to these projects if sanctions are lifted. I believe that the key Russian companies will be willing to revive these projects under different circumstances.

Sanctions against the Russian financial sector hit its key actors, such as Sberbank, VTB and Vnesheconombank, and are an important factor. Lifting the sanctions, including in the sphere of ​​finance, would facilitate resetting relations between Russia and the United States, which Hillary Clinton, former U.S. secretary of state and leading Democratic Party presidential candidate, mentioned a few days ago.

For us, a reset is, in fact, an opportunity to return to normal relations, not gain access to some preferential mode of partnership and cooperation. Although, as I mentioned earlier, we remain key partners in space and aviation.

I can see an objection coming. Some may argue that even when our relations were “normal,” the volume of trade and economic cooperation between our countries was fairly modest.

However, several factors need to be taken into account. First, if you take the size of the Russian economy, it is 10 times smaller than the Chinese economy. This explains the significantly smaller volume of our mutual trade. Second, the European Union has always been our key partner.

Also, let’s not forget about the quality factor: our partnership covers strategic areas, such as the aviation, the aerospace and the nuclear industry.

It remains to be seen whether Russia can in the future become a partner of the United States in multilateral U.S. trade and investment initiatives, such as the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP). U.S. Secretary of State John F. Kerry said that Russia can join the TPP if it wants.

It’s premature to discuss prospects and forms of Russia’s participation in it, as these projects were designed without Russia in mind. However, we have solid and deep relations with many countries that have become parties to the TPP, including, in addition to Japan and South Korea, Vietnam, with which we have recently signed a free-trade zone agreement.

Russia is interested in expanding mutual trade and contacts, not creating new barriers.

The policy of “turning to the East” recently proclaimed by Moscow does not mean that we are turning away from the West. Of course, the geopolitical conflict in Ukraine led to a major reformatting of our relations with the European Union and the United States. However, no matter what disputes or conflicts we may have, we must work together to come up with development models that would really bring our nations closer despite our differences. We need to cooperate to promote development, not enmity or forceful imposition of values.

In closing, the economy may have been victimized by politics, but it can still be a foundation for promoting political cooperation.

Andrei Klepach is chief economist of Vnesheconombank. He also served as deputy minister of economic development and trade (2008-2014).

The US-Russia Crosstalk is a joint initiative of the Kommersant newspaper and Valdai Club in Russia and The Washington Times and Center for National Interest in the United States aimed at fostering a dialog on strategic engagement between the two countries.

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