Kompaniya (Moscow) – November 17, 2008

In light of the rapidly developing global financial 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 held by RBC in Chile and Argentina on November 1-8 testify to the fact that the remote but quite stable Latin America is ready for the development of mutually beneficial relations.

At a time when it normally gets cold in Russia and the fall is already in full swing, the weather in Latin America is cardinally different: vineyards are turning green, the trees are all painted different colors, and scattered tourists are leisurely spending time on the beautiful beaches of the Pacific Ocean. Whether it was the weather or the remote location of the continent – far removed from the turbulent financial crisis – the forum’s participants from Russia and Latin America, both businessmen and officials were all highly optimistic about the future and open for 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. The fact that an extensive platform for cooperation already exists makes the matter even more important. Chile’s economy, for instance, is open and stable and has been growing annually at an average of 5.7 percent over the last 15 years. Greater foreign investment inflow and increasing foreign trade are also fueling the country’s gradual development. Another positive factor is the lack of non-tariff limitations. 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. What is more, 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. According to participants of the conference, the signing of this agreement would open up new horizons for mutually beneficial relations. Meanwhile, Chile’s most popular export products have long since been traded in Russia: meat and dairy products, fish – salmon and trout in particular. At the same time, Chileans have expressed interest in Russian exporters’ supplies of energy, mining, and metallurgical equipment, as well as in trucks and other types of equipment. Chile’s Minister of Public Works Sergio Bitar indicated that trade between Russia and Chile jumped five times over the last six years – from $50m in 2001 to nearly $300m in 2007. Russia is at the bottom of the rating list among Chile’s leading trade partners, however, lagging far behind the USA, Japan, South Korea and China.

Compared to Chile, the increase in trade with Argentina was more significant, though it still stands to be improved upon. According to Leopoldo 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 to the Russian market.

Having noted positive developments in the sphere of trade, the conference’s participants pointed out that there was still much to be done in terms of mutual investments. Garegin Tosunyan, President of the Association of Russian Banks, admitted 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.” Meanwhile, 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. Head of the 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, noted that Chile could become a so-called platform for investors to promote their businesses to other markets. He also cited steps to draft an agreement on free trade between the two countries. Dankvert believes that Chile’s advantages for Russian businesses include the country’s developed infrastructure, and high level of technologies in the sphere of agriculture, mining, fishing, timber and shipbuilding industries. At the same time, he indicated that mutual investments between Russia and Argentina must be actively promoted, as Power Machines was currently the only Russian company operating on Argentina’s market: nearly 20 percent of electric power is generated by equipment that was supplied and installed by the company.

At the plenary and topical meetings devoted to different sectors and aspects of potential cooperation, participants of the business forum indicated that even despite the pessimistic mood dominating business circles due to the crisis, the summit Russia – Latin America was 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.”

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.***

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.