A Decade of Building Bilateral Business Bonds

For MTStrauss introducing the late General Alexander Lebed, the keynote speaker at a November 1996 USRBC event in Washington.
Back in 1993, U.S. Ambassador to Russia Robert Strauss had just left that post and Eugene Lawson was stepping down as vice chairman of the U.S. Commerce Department's Eximbank.

A decade later, they are celebrating the 10th anniversary of the U.S.-Russia Business Council, the organization they founded in response to arguments from executives of leading U.S. corporations that something needed to be done to educate U.S. firms about business opportunities in the new, post-Soviet Russia.

"At the time there was a tremendous sense of urgency," Strauss said in a telephone interview from Washington. "Everyone said there would be a market that would open up quickly and our hopes were higher than was justified."

Since those early days, the USRBC has grown from an organization with a couple of dozen members to a leading trade association representing the interests of almost 300 members.

Based in Washington DC, the council advocates ways to expand and enhance bilateral relations, not between the two governments, but among the private sectors.

The USRBC says its aim is to promote an economic environment in which business can succeed in what is a challenging Russian market.

To achieve this mission, the council has stepped in in a number of ways.

When a member company has found itself in a commercial dispute, the council has in the past sought to resolve the problem through its contacts with relevant government officials, through letters to congressmen and policymakers, and public information campaigns.

The council has also organized several committees and working groups to facilitate the exchange of ideas on policy issues related to aerospace and aviation, agribusiness, energy, IT and e-commerce, legal issues and World Trade Organization accession.

"The USRBC is a valuable way to be part of a broader group of people and companies, acting together," said Esther Dyson, chairman at EDventure Holdings, an investment company active in the IT sector.

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Former Pepsi CEO Donald Kendall speaking with President Vladimir Putin in 2001.

She had high praise for the council's IT forums, saying they "are helping to foster the more effective use of IT, the growth of the sector itself, and more enlightened government policies about it."

Some criticize the organization, though, for being too much of a cheerleader for Russia, giving rosy pep talks at the expense of a more objective, balanced take on the risks U.S. firms face when launching ventures in Russia.

The USRBC additionally conducts Russian and U.S. government policy research, publishes a quarterly magazine called Russia Business Watch, and organizes regular briefings and networking events.

Boeing's vice president for international relations, Thomas Pickering -- a former ambassador to Russia, like Strauss -- said that when he traveled to Washington from the embassy, he would often stop by the USRBC because it was a valuable forum for people from the Washington policymaking community to meet visiting senior Russian government officials.

The council originally oriented itself toward U.S. companies, but it has since opened itself up to Russian businesses, too. Flagship airline Aeroflot in 1999 became the first Russian company to join the USRBC, doing so as part of its initiative to enhance its name recognition and improve its image in the United States.

Since then, the council's Russian members of have grown to 40 and the council has expanded its scope to lobby on behalf of those firms as well.

"The USRBC has increased the West's loyalty to Russian enterprises and the country's economy in general," said Artyom Minayev, spokesman at Vimpelcom, Russia's No. 2 cellular operator. "Without this help, it would have been difficult for us to convince the West to invest money in Russia and, in particular, in Vimpelcom."

The USRBC has also played a key role in the Russian-American Business Dialogue, or RABD, a private sector initiative launched by U.S. President George W. Bush and President Vladimir Putin at their July 2001 summit in Genoa, Italy. The dialogue is designed to strengthen the economic and commercial ties between the two countries.

The dialogue is a joint project run by the USRBC along with the American Chamber of Commerce in Moscow and on the Russian side, the Union of Industrialists and Entrepreneurs and the Russian-American Business Council headed by former Ambassador to the United States Yuly Vorontsov.

Moscow-based AmCham and Washington-based USRBC "work hand in hand across long distances to improve investment participation and investment relations," Boeing's Pickering said.

The dialogue covers several important aspects of bilateral relations, including visa and customs issues, access to markets, investment policies, high-tech support, the growth of small and medium-sized enterprises and judicial reform.

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Former Pepsi CEO Donald Kendall speaking with President Vladimir Putin in 2001.

The USRBC has pushed for an end to the U.S. Jackson-Vanik amendment, which links Soviet-era emigration policies with trade status, but has been used by the U.S. Congress to leverage Russian concessions during a simmering poultry trade dispute. The USRBC hopes permanent normal trading relations will soon be extended to Russia.

The council has also supported Russia's early succession to WTO membership and has advocated the reforms needed to improve the country's investment climate.

Last May, during a Bush-Putin summit in Moscow, the council and the three other groups within the Russian-American Business Dialogue presented the dialogue's initial report to the two presidents in a meeting at the Kremlin.

As the council is celebrating its 10-year anniversary, USRBC president Gene Lawson reflected on the council's achievements. "The council's greatest achievement over the past decade is of a more macro nature -- helping to foster a climate in which normal business can operate predictably," he said.

"I think we have had a direct and tangible impact on the way foreign investment is perceived in Russia. That perception has evolved from at least a hesitant, maybe a fearful approach to an atmosphere where foreign investment is welcomed and its economic and social contributions are recognized," he said.

"Helping to integrate Russia into the global economy is a central part of our mission, and in a bilateral context we firmly believe that trade and investment is a two-way street," said Z. Blake Marshall, executive vice president at the USRBC.

"We were proud to have played a role in giving our economic partnership a significant boost last year when Russia was formally designated a market economy under U.S. trade law," Marshall said. "Going forward, our campaign in this area will tackle the challenge of terminating the application of the Jackson-Vanik amendment to Russia, thus granting permanent normal trading relations on the road to WTO accession."

Alexis Sukharev, president of Auriga, a Russian IT company, said he especially valued the USRBC's efforts to promote economic and other reforms in Russia, lobbying for Russia's market economy status under U.S. trade laws and for WTO accession.

"In good and in not so good times in U.S.-Russia relations, the USRBC has always been a strong champion of strengthening the relations and actively worked towards achieving practical results," Sukharev said, recalling that the USRBC once helped an Auriga employee who had been denied a U.S. visa.

But the USRBC faces a growing number of challenges.

"There are many more challenges now, because there are many more opportunities now," Strauss said. "Opportunities create challenges."

"When we started there weren't very many opportunities, we just thought they were there. We are poised now to substantially increase U.S. investments in Russia," he said.

In the near term, Strauss said, we can expect to see some Russian firms investing in the United States.

Staff Writer Caroline McGregor contributed to this report.