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INTERVIEW-New Russia-U.S. commission will help investors

Published 07/09/2009, 07:06 AM
Updated 07/09/2009, 07:16 AM
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* Russia-U.S. commission to address business worries

* Good Obama, Medvedev chemistry seen helping trade

* Russian resource nationalism may ease

By Dmitry Zhdannikov and Kyril Sukhotski

MOSCOW, July 9 (Reuters) - A new top-level U.S.-Russia commission set up by Presidents Barack Obama and Dmitry Medvedev should help investors resolve problems such as corruption and bureaucracy which are impeding trade, a business leader said.

Obama held two days of talks in Moscow on Monday and Tuesday in his first visit to Russia as president.

The two countries agreed a target for cuts in nuclear arms and a deal to let U.S. troops fly across Russia to Afghanistan, but differences remained over U.S. missile defence plans and U.S. trade restrictions on Russia dating from the Cold War era.

Edward Verona, head of the U.S.-Russia Business Council, told Reuters that one little-noticed piece of news from the visit was the creation of a bilateral commission. This will boost trade, which was just $36 billion last year -- as much as Russia trades with Poland or the United States with Thailand.

"The commission is very important and I don't think you can do deals without some government involvement and the blessing of both governments," Verona told Reuters on Wednesday.

"Corruption, the rule of law and bureaucracy are easier to address through this channel... instead of individual companies going to the press and announcing that they maybe suspending their investment in the country," he said.

The two states had a high level inter-governmental commission with a different composition back in the 1990s but it was abolished as relations between the two former Cold War rivals chilled this decade.

The new commission will be chaired by U.S. Secretary of State Hillary Clinton and Foreign Minister Sergei Lavrov and will have members covering different areas. The business section will be headed by U.S. Commerce Secretary Gary Locke and Russia's Economy Minister Elvira Nabiullina.

"It is a presidential commission. So the heads of the commission are Obama and Medvedev and the accountability ultimately goes up to them," says Verona, adding business was placing high bets on good relations between the two presidents.

"The chemistry between the two presidents was very positive. Nobody is building false expectations on the strength of their personal relationship but that they get along is a good thing," said Verona, who previously worked for the U.S. Embassy in Moscow and oil majors in Russia and other ex-Soviet states.

ENERGY DIALOGUE

The new commission will have an energy section and Verona said he hoped the energy dialogue between the world's largest energy exporter and energy importer would be revived.

Recent deals with European majors Total and Shell suggest resource nationalism may ease.

"There may be a growing awareness there is a risk of geological decline in Russia's existing fields leading to an eventual shortfall in production for export and domestic consumption over the next 5-10 years," he said.

U.S. majors ExxonMobil and Chevron have said they want changes in Russian laws which cap foreign involvement in top resource-focused firms at 10 percent and order foreigners to hand back deposits for a small premium if exploration confirms they are of strategic importance.

"The (Russian) government may be aware that investment capital is scarcer than it was a year or two ago and they need to perhaps create conditions to make it more attractive for foreign investors," Verona said. (Editing by Matthew Jones)

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