Profil (Moscow) - October 24, 2008

In light of the rapidly developing economic crisis, businesses are currently much more concerned with retaining their market positions than with finding new contacts and opportunities.

The results of the business summit Russia-South America: Strategic Partnership and Profitable Investment organized by RBC testify to the fact that the creation of a platform for a new financial system is only possible on the basis of a cross-cultural model.

With this in mind, holding such a prominent business forum in Latin America is a logical step of great significance, similar to that of the Great geographical discoveries made in the 15th and 16th centuries. Today, for the rest of the world, Latin America is not just an export market and a source of natural resources, but a full partner ready to develop mutually beneficial relations, and one of the key players in the global economy.

The realization of this fact has brought over 200 participants to RBC's international conference, including top officials from Russia, Chile, Argentina, senior officers of major companies, and public officials. The conference was attended by Ambassador Extraordinary and Plenipotentiary of Russia to Chile Yury Filatov, Head of Federal Service for Veterinary and Phytosanitary Surveillance of Russia Sergei Dankvert, who is also Chairman of the intergovernmental commission on cooperation with Chile and Argentina, Chairwoman of the Federation Council Information Policy Commission Lyudmila Narusova, Chairwoman of the Russian Presidential Council for the Development of Civil Society Institutions and Human Rights Ella Pamfilova, President of Association of Russian Banks Garegin Tosunyan, General Director of the Moscow International Business Association Alexander Borisov, President of the Russian Financial Corporation Bank Andrei Nechaev, Vice President of Independent Association of Machinery Manufacturers (NAMS) Alexei Eryomenko, to name just a few.

Both Russian and Latin American business people and officials were open to beneficial cooperation. "We believe that in the future, thanks to the significant production and intellectual potential of both parties involved, Russian-Latin American cooperation will be characterized by a considerable increase in trade and investments," Economic Minister of Russia Elvira Nabiullina said in her welcome address to conference participants.

What is more, there is an extensive platform for cooperation.

From trade to investments

Among the key factors for successful cooperation is the openness and stability of Chile's economy over the last 15 years. It has been rising 5.7 percent per year thanks to greater foreign trade and foreign investment inflow.

Executive Vice President of the Chilean Economic Development Agency (CORFO) Carlos Alvarez announced that the country had created a comfortable environment for foreign businesses: low customs duties, low level of protectionism, and zero tariffs on imports. The single import tariff currently stands at 6 percent. Furthermore, the country is working on the signing of bilateral and multilateral agreements on free trade, which would prompt a decrease in the effective import tariff to 1.3 percent. Chile has already signed such agreements with the U.S., the European Union, Central America, South Korea, New Zealand, Canada, China, and India, as well as with other countries and trading unions. Russia and Chile are currently drafting a bilateral agreement. Ambassador of Russia to Chile Yury Filatov expressed hope that the work of an intergovernmental commission on trade and economic cooperation would enhance investment cooperation. Meanwhile, Sergei Dankvert, representing Russia in the commission, pointed out that Chile could become a so-called platform for investors to promote their businesses to other markets. He also cited steps to help expedite the drafting of an agreement on free trade between the two countries.

Head of the Russian office of Mr. Fernando Belloni, director of the Commercial Representation at the Chilean Embassy, said the following about the potential cooperation between the two countries: "We should be a platform for Russia entering Latin America, and Russia may open its doors for Chilean businessmen to work in the CIS. According to forecasts of the International Monetary Fund and the World Bank, economic growth in Chile and Russia is estimated at 3.5 and 5.5 percent, respectively. With this in mind, we must use this opportunity to promote work on devising a memorandum on free trade." For the moment, however, despite the constantly rising trade between our countries (according to Chile's Minister of Public Works Sergio Bitar, trade jumped five times over the last six years - from $50m in 2001 to nearly $300m in 2007), there is still room for improvement in trade relations between Russia and Chile.

Chilean participants of the conference pointed out that Russian businesses should take a closer look at Chile's agriculture, energy and tourism sectors, as well as metallurgical and mining industries, as the most promising sectors for mutually beneficial cooperation, since investments in these sectors can prove to be the most lucrative. Sergei Dankvert indicated that Chile's advantages for Russian businesses include the country's developed infrastructure, high level of technologies in the sphere of agriculture, mining, fishing, timber and shipbuilding industries. He also pointed out Russia's pride in the fact that its electrotechnical, mechanical and mining equipment was well-known in Latin America, meaning that it should also enjoy high demand on the Chilean market. "Furthermore, we would like to supply aviation equipment to this market and establish assembly plants in Chile," the Russian official stated.

Russian business is also placing great hopes on cooperation with Argentina, which is the continental leader in terms of GDP growth. Compared to Chile, increase in trade with Argentina was more significant, though it can still be improved. According to Leopolde Bravo, Argentina's Ambassador to Russia, mutual trade stood at $138.5m in 2007, and had already reached $747m in the first half of 2008. Russia supplies Argentina with fertilizers, diesel fuel, paper, carton, rolled steel and mechanical and technical equipment, while Argentine companies export beef, fruit, animal feedstuff, wine, dairy products, raw sugar and fish.

Meanwhile, there is still much to be done to improve Russian-Argentine investments. Power Machines is currently the only Russian company actively operating on Argentina's market: nearly 20 percent of electric power is generated by equipment that was supplied and installed by the company.

When speaking of financial cooperation, Garegin Tosunyan, President of the Association of Russian Banks, expressed regret that "Latin America still remains an unknown land on the map showing Russian banks' expansion. Partnership between Russian financial circles and Latin America's businessmen is only now starting to form."

Anti-crisis contacts

Both at the plenary and topical meetings devoted to different sectors and aspects of potential cooperation, participants of the business forum indicated that despite the pessimistic mood dominating business circles due to the crisis, the summit Russia - Latin America was being organized at just the right time. Joint discussions of common problems help everyone find interesting and beneficial solutions to existing problems.

Antonio Estrany, President of Consejo Empresario Argentino-Ruso (CEAR) - a non-governmental organization striving to create favorable conditions for the development of cooperation between Russia and Argentina - noted that "the summit is taking place at a time when trade has not only become strategically important, but when it has also become an integral part of the common solution implemented jointly by governments of the two countries in order to promote the prosperity of our regions." Meanwhile, venues like business conferences organized by RBC provide business people with an opportunity to establish direct contacts not only with partners, but also with authorities of different countries. It is this approach that offers a general idea on the true potential of strategic partnerships.