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Russia's Economic Diplomacy

Article provided by:"Diplomat" magazine

5 March 2003
Russia's Economic Diplomacy


Russia’s “Economic Diplomacy” on the Upgrade

Deputy Foreign Minister Andrey Denisov, interview with Yury Tavrovsky, Diplomat’s Editor in Chief

Andrey Ivanovich, what are the terms of reference of a deputy minister in charge of economic issues?

They are fairly large in scope, because work in the economic sector is dictated not by some kind of regulations but by life itself, which confronts us with new situations popping up every day. Russia’s economic interests become ever more widespread and varied and need to be secured and supported in both political and diplomatic terms. Therefore I would not speak about the responsibilities of the deputy minister concerned but rather about the functions of the Ministry’s economic bloc. This bloc includes, first of all, the Department of Economic Cooperation (DEC) whose structure is tailored for the tasks we seek to address. Apart from the DEC, the bloc comprises individual divisions of other departments handling interaction with various regional economic groups.

            The MFA’s specific nature is such that the territorial departments comprehensively deal with relations with the countries they supervise, including economic ties. That’s why day-to-day contacts with this or that Moscow-based diplomatic mission are primarily based on territorial departments. If required, the DEC and other appropriate economic divisions give diplomatic missions all needed assistance, especially, as regards the deepening of their ties with Russian counterparts and interaction with different ministries of the government’s economic bloc: the Economic Development Ministry, Energy Ministry, Transport Ministry and several other ministries. Today, coordination of our efforts in the field of foreign economic activities is as crucial as never before.

“Economic diplomacy” has become a vital component of Russian foreign policy. Along with its traditional mission, namely, promotion of trade and economic exchanges with foreign countries, it covers a variety of concrete areas, such as investment cooperation, interaction with international economic organizations and financial institutions, regional structures, the involvement in the analysis, and search for solutions to global economic challenges. All these matters are always the focus of attention of the MFA’s top executives; these problems were also raised by Minister Igor Ivanov before his foreign counterparts. We are far from being shy when it comes to lobbying---in a good sense of this word---our legitimate interests in the economic sphere.


What significance of boosting ties with Russian partners is attached by a “political” ministry, such as the MFA, to trade and economic cooperation with other countries?

Our economy is becoming increasingly open to foreign partners and gets progressively integrated into the system of world economic relations. Russia advocates liberalization principles in world commerce. It seeks to vigorously and profitably participate in international exchanges of goods, services, and technologies and strives to occupy a worthy place in international division of labor.

Russia’s foreign trade turnover in 2002 reached US$167 billion, the favorable balance exceeding US$45 billion. Such “delta” between the exports and imports contributes to stability of the Russian currency market, accumulation of gold and currency reserves and accuracy of payments in servicing our foreign debts.

            Speaking on July 12 last year at an expanded meeting at the Foreign Ministry involving ambassadors of the Russian Federation, President Vladimir Putin said, “The diplomatic support of national business has to acquire a systemic and long-term character in the final analysis.” Following this guideline, we seek by all means at our disposal to foster trade and economic cooperation of this country with foreign countries and contribute to its diversification. Among major partners I want to single out is the European Union (EU) that accounts for more than 35 percent of Russia’s foreign trade turnout. With new members joining this organization in 2004, the share of the EU can even exceed 50 percent. Our economic relations with CIS countries as well as with the U.S., Japan, China, India and other countries are burgeoning, too.

 Which are the main areas of Russia’s “economic diplomacy”?

I would point to several sectors. Our participation in talks on Russia’s accession to the World Trade Organization (WTO) is one of the most important lines of activity. Obvious progress was made that allowed to begin drafting the Summary Report of the Working Group, which outlines the conditions of our membership in the organization. At a regular meeting of the Working Group held in Geneva in December 16-18, it was decided to intensify the negotiating process in order to quickly reach mutually acceptable solutions. We hope to sign---as early as the summer of 2003---a whole range of bilateral protocols regarding the conditions of access of goods and services to Russian markets. What matters most is that the obligations imposed on us as an “entry ticket” fee go not beyond the WTO’s standard package and be acceptable from the viewpoint of our domestic economic interests.

           Our relations with the Organization for Economic Cooperation and Development (OECD) are also on the rise. We highly appreciate the fact that Russia was transferred from the sixth to fifth group of insurance risks according to the OECD’s classification. Owing to our fairly good economic performance in 2002, we expect the OECD to further raise Russia’s credit rating.

Last year’s meeting of the G8 countries’ leaders in Kananaskis adopted a special decision on the smooth progress of democratic and economic changes in Russia and the latter’s presidency in this influential club in 2006.

            In the context of combating terrorism financing and the fight financial crimes, we continued establishing constructive cooperation with the Financial Action Task Force (FATF), the Twenty Group and other organizations. Furthermore, we joined the Egmont Group that incorporates the “financial intelligence services” of 59 nations.

            The decisions adopted in 2002 by the U.S. and the EU on granting Russia market economy status were a result of painstaking diplomatic efforts and in-depth information work performed through Russian diplomatic missions.

            The energy sector has traditionally been crucial for Russia. In 2002, we have boosted our ties with OPEC and the International Atomic Energy Agency (IAEA). We went on with our Energy Dialogue with the European Union in the interests of stable development of Russia’s fuel and energy sector and the EU’s energy security. We have also started an energy dialogue with the U.S.

And last but not least, we cannot help mentioning everyday work of our foreign-based diplomatic missions that promote the interests of Russian economic operators and help strengthen their positions in foreign markets. This is a normal international practice, and we intend to apply it in the future.

 How does the Foreign Ministry, a state structure, interact with private economic entities?

We constantly extend our contacts with the Russian Union of Industrialists and Entrepreneurs, the Chamber of Trade and Industry, the Coordinating Council of domestic goods manufacturers, funds for the promotion of entrepreneurship as well as with branch-related associations, manufacturers of ferrous metal products, oil, mineral fertilizers, freight hauliers, fishery industrialists, and others. The Foreign Ministry provides Russian companies---at their request---with various legal and economic information on the situation in foreign markets as well as on foreign partners. More often than not, we assist domestic businesses in case when foreign partners encroach on their legitimate rights or in the event of anti-dumping investigations with regard to Russian-made products, for instance, steel, seamless pipes, and alufoil. “Diplomatic support” of major projects under way abroad with the involvement of Russian companies is a large and essential part of the Ministry’s activities.

I would like to point out that we are increasingly cooperating with foreign companies interested in conducting business with Russia. The Foreign Ministry actively helps solve investors’ problems within the shortest time possible; it “forwards” investors’ suggestions, recommendations and concerns to the relevant Russian institutions and higher authorities. Our task, as we see it, consists in improving both the working environment of our entrepreneurs operating abroad and “the habitat” of foreign business in Russia by all political means at the disposal of the Foreign Ministry. We hope that the blending of the two above-mentioned components will contribute to further promotion of Russian reforms and a more organic integration of this country into the world economy.

           I dare state that “economic diplomacy” today is a vital, interesting and promising area of our foreign political activities.


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