Karyera (Moscow) - December 1, 2008.

The Russia-South America: Strategic Partnership and Profitable Investment international business summit was organized by RBC in Chile and Argentina on November 1-8. Despite the crumbling global stock market indices, participants of the summit tried to speak positively of the crisis, pointing out all the opportunities it was opening up for the emerging markets.

The summit brought together nearly 200 participants, including top-ranking officials from Russia, Chile and Argentina, heads of major companies, and public officials. Among the conference's guests were Ambassador Extraordinary and Plenipotentiary of Russia to Chile Yury Filatov, Ambassador Extraordinary and Plenipotentiary of Russia to Argentina Yury Korchagin, Head of Federal Service for Veterinary and Phytosanitary Surveillance of Russia (Rosselkhoznadzor) 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 the 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, and Vice President of the Independent Association of Machinery Manufacturers (NAMS) Alexei Eryomenko, as well as many other Russian businessmen and politicians. The summit was held as part of the official program of Russia Days in Latin American countries, organized under the patronage of the Presidential Executive Office of Russia, the Foreign Ministry of Russia, and Russia's International Center for Scientific and Cultural Cooperation.

Chilean representatives of businesses indicated that the country could be considered a 'safe haven.' According to Hugo Lavados Montes, Chilean Minister of Economy, Development and Reconstruction, stock indices in the republic dropped 20 percent, which was significantly less than in other countries. He believes that Chile's performance was better than that of other emerging countries thanks to its high macroeconomic figures, the Central Bank's steps to ensure sufficient liquidity for the banking system, promotion of loans to medium and small businesses, efficient government policy in the financial sector (during the period of high copper prices, the republic managed to build up reserves of nearly one third of its GPD), export diversification (the country does not depend on the economic recession currently in full swing in the U.S.; it exports to Europe and Asia not only mining industry products, but also agricultural products). Moreover, over the last 20 years of dynamic economic development, Chile created a reliable infrastructure and communication system for businesses. Today, the country attracts foreign investors thanks to its low customs duties, low level of protectionism, and zero tariffs on imports on many products. Furthermore, both foreign investors and national entrepreneurs enjoy the same business conditions.

At the same time, Director of Argentina's National Agency for Investment Development Beatriz Nofal stressed that Argentina also provided great conditions for foreign investors. She pointed out that the country's energy system, oil and gas sector, railroad construction, production of food products and bio-fuel, biotechnologies, car industry and agricultural supplies had the greatest investment potential for Russian businesses. The Argentine government guarantees security for investments, expatriation of revenue, and the opportunity to secure internal loans. What is more, foreign investors enjoy the same rights and benefits as local entrepreneurs: they are entitled to use the same system of benefits. The business meetings in Latin America proved that Russia has yet to learn much from the experience of these countries. Curiously enough, Russia used Chile's experience in the early '90s when the government launched its pension reform. Ella Pamfilova, for instance, pointed out four things that she believed Russian businesses and government should pay attention to. First of all, the system of concessions that allowed the country to build good roads and solve transportation problems. Second, the development of Chile's tourism industry. "Eco tourism in Russia may become a Klondike of sorts!" she observed. "We need to invest funds in the re-cultivation of land, and protection and restoration of nature and environment, as opposed to merely extracting oil and gas. Investments in ecology will result in changes in infrastructure, new roads and hotels." Moreover, the Chilean poverty reduction program also deserves special attention. "Unfortunately, there is no such efficient government policy in this sphere in Russia," Pamfilova stated. Finally, there is no corruption in Chile, while Russian businesses lose their dynamics due primarily to corruption, as it takes quite a long time to receive all approvals and pay all the bribes.

In general, Russian participants pointed out that the conference proved to be very useful for them. "All of the reports in the banking section were quite interesting for me, and information on the organization of global economy is always useful," said Andrei Nechayev. "It was a revelation for me, for instance, that the ban on marginal deals was one of the key driving factors for capital outflow from emerging markets."

Certainly, the topic of the global financial crisis was unavoidable, but fortunately, the conference's participants attempted to find a positive side to it. It was obvious that the countries with developing economies wanted to use the crisis situation in order to strengthen their geopolitical positions. The forum in Santiago and Buenos Aires presented a kind of a platform for expressing criticism of the existing financial and economic system. "The crisis has already demonstrated that in order to overcome it, countries have to come up with a global answer, indicating that the world is moving towards a multi-polar and multi-cultural model," said Argentina's Foreign Minsiter Jorge Enrique Taiana. The Russian entrepreneurs were in perfect agreement about this. "The crisis has not only put an end to the unilateral approach to solving global problems, but also promoted multilateral solutions," Ambassador Extraordinary and Plenipotentiary of Russia to Argentina Yury Korchagin stated. "Russia and Argentina promote the democratization of international relations, which will ultimately allow us to intensify business cooperation."

Meanwhile, Chilean business people believe that the time is right to take advantage of the opportunities that the crisis is offering. 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." The Russian participants, meanwhile, expressed interest not only in the expansion of food products from Chile, but also indicated their interests in the Pacific Sea shores. Russia is poised to promote its electrotechnical, mechanical and mining equipment in Chile, which has already proven to be popular in other Latin American countries (20 percent of Argentina's electric power is generated on Russian equipment, for instance). "Furthermore, we would like to supply aviation equipment to this market and establish assembly plants in Chile," said Sergei Dankvert.

Despite the promising future of the trade and economic relations between Russia and Chile, there is still much room for improvement. "Russian-Chilean relations are currently developing at a pace slower than we would actually like. Trade between the two countries jumped five times over the last six years - from $50m in 2001 to nearly $300m in 2007, but mutual investments stood at a meager $60m," according to Chile's Minister of Public Works Sergio Bitar. Russia's Ambassador Extraordinary and Plenipotentiary to Chile Yury Filatov attributed such low figures to a lack of information about opportunities in both countries. "Do we see any efforts on the part of marketing and advertising specialists?" he inquired. "Interbank cooperation is poorly developed, and without it there can be no large-scale projects." Garegin Tosunyan had to step forward on behalf of the Russian banking sector, however. According to President of the Association of Russian Banks, investors were the key driving force for the development of trade and economic relations between Russia and other countries. "The primary interest of major players is certainly European partners, as they are located closer to Russia," he stated. "Latin America is currently playing a secondary role. We do not travel there often and rarely get a chance to meet face to face with their entrepreneurs. In terms of government support for exporters, I must admit that unfortunately, in Russia, this does not apply to Latin America."

Things were a little better for Russian-Argentine trade cooperation. Meanwhile, even though trade between the two countries exceeded $1.3b in 2007, there is still one major problem in trade relations between the two countries: Argentina has yet to recognize Russia as a market economy. The Russian economy's current status, however, has resulted in Argentina's use of anti-dumping measures against Russia's imports (regarding Russia's steel, for instance). At the same time, Sergei Dankvert indicated that many Argentine products in Russia were subject to a 25-percent discount on import customs tax in accordance with an agreement on mutual trade preferences from 1993. What is more, the discount applies to Argentina's key export items - food products. "Why don't Argentines comply with the agreement from 1993? Should our government remind the republic's government about existing documents by, say, changing the discount to 10 percent?" Dankvert asked rhetorically, off the record.

Meanwhile, all these problems of economic cooperation between the two countries will be solved in early December, when a delegation of Argentine businessmen is due to visit Moscow together with President of Argentina Cristina Fernandez de Kirchner. Speaking of the upcoming visit, Argentina's Foreign Minister Jorge Enrique Taiana pointed out that it would promote the development of political, legislative, and taxation aspects of relations between the two countries.

Summing up the results of the conference, its participants observed that this was the first time ever that such a high-profile and diverse delegation from Russia visited Latin America. Furthermore, President of the intergovernmental commission on trade, economic, scientific and technical cooperation with Russia Carlos Furche drew the attention of the conference's participants to the fact that the forum was held prior to the Asia-Pacific Economic Cooperation (APEC) summit in Lima scheduled for November, in which Russian President Dmitry Medvedev was expected to participate, noting that the meeting would help enhance trade and economic and business relations between Russia and Latin American countries.