Ties at the Top

MTAlexander Zhukov has been a deputy prime minister since 2004 and also serves as chairman of Russian Railways.

"We're on the right track," President Dmitry Medvedev said during his state visit to France in March. With Nicolas Sarkozy set to join Medvedev, chairing a session at this year's St. Petersburg International Economic Forum, a major aim is for strengthening political relations to support growing economic links. Alexander Zhukov, Russian deputy prime minister, and Christine Lagarde, France's economic affairs minister, who co-chair the two states' intergovernmental committee, explain developments so far and the future of economic ties.

In what direction is investment going to flow between Russia and France in the coming decades?

So far investment has flowed predominantly from France to Russia. Over the past five years that volume of investment has grown more than eight fold, and in March exceeded $8 billion, including more than $2 billion in direct investment. France is one of our major partners, after the Netherlands, Germany and the United Kingdom, but ahead of the United States. Results from 2009 show that Russian companies invested about $400 million in France, which you see shows a big difference. Whether this means that in future there will be a Russian investment boom in France is hard to say. Objective indicators show France to be one of the most attractive countries for foreign investors, but this might not convince Russian companies, if they have not seriously looked into France as an option or sounded out their strategic interests in the market there. Russian business is only just beginning to develop on an international level. In any case, the Franco-Russian Council for economic, financial, industrial and commercial matters, or CEFIC, is paying close attention to investment issues.

Does Russia see bilateral relations with France as separate from its relations with the European Union?

It is not appropriate to separate or contrast our bilateral relations with France and those with the European Union.

Comprehensively developing and deepening relations with the EU is one of the highest priorities for Russian foreign policy. We see partnership with a united Europe as one of the conditions for successfully developing and modernizing Russia's economy. At the same time, the EU is a community of 27 very different states, with which Russia has been developing differing ties in different ways. Let's not forget that the European Union is a relatively young organization, and Russia's history of relations with some European countries, such as France, goes back many centuries.

These days cooperation between Russia and France has reached the level of strategic partnership and has become an independent and important factor in both European and world politics. We value this partnership highly and are of course counting on our bilateral cooperation with France deepening further. Given the prestige of Paris in the EU, we are also counting on our French partners facilitating the comprehensive development of relations between Russia and the European Union. In this sense, the Russian-French and Russian-EU partnerships really are quite closely interrelated.

How will the France-Russia year help the development of further relations between the two countries?

The main objective of this ambitious project is, in a fairly short period of time, to create the most favorable conditions possible for Russians and the French to see even more clearly how much unites them, and to feel the need to get to know each other even better.

The program has proven bright, varied and interesting. It includes more than 400 events in a range of spheres including culture, education, sport, science and economics. We are looking forward to welcoming President Sarkozy on June 18-19 at the St. Petersburg Economic Forum, which France is attending as a guest of honor.

We want these activities and exchanges to give a strong new impetus to relations between our countries and peoples and hope that its positive impact will be felt even after the end of 2010.

What trump cards and advantages does Russia have for conducting bilateral economic negotiations with France?

It's not quite right to put the question like that. Our relations with France are a partnership that is built not on finding trump cards or exploiting the other's weaknesses, but on mutual interest and benefits. The special or even unusual thing about trade and economic relations between Russia and France is that we are able to cooperate in areas where we are competitors, such as space, aviation, nuclear energy and agriculture.

Both our countries' strong positions in these industries is obvious, and although conflicts of interest are inevitable, they do not determine our strategic cooperation. Rather, it is directed by the search for niches where we complement each other, such as the project to launch Russian Soyuz rockets from France's Kourou launch pad in French Guyana. This is the only way an international partnership based on industrial, scientific and technical cooperation can create a competitive innovative product. Overall, we have the same trump cards and advantages as each other.

Could it be said that Russia's relations with France are now warmer than they were in the 1990s?

How would I define "warm relations" between two states? Above all a feeling of mutual sympathy and respect between their people, since politicians come and go, but people remain. However, in recent decades, relations between both the people and leaders of our two countries have been similarly friendly. This has a significant meaning and counts for a lot.

Of course, you need to be realistic and understand that there is no place for altruism in politics or international relations. However warmly heads of state feel about each other, they must be guided first and foremost by their country's own national interests. I must say that in many areas the interests of Russia and France have been very close in recent years, and sometimes been fully compatible.

Relations have been evolving steadily since the early 1990s, becoming more active, varied and richer, and as a result have reached a new level in terms of quality. Of course, both Boris Yeltsin and Jacques Chirac, who is well-known and loved in our country, played a huge role in this.

How important is France's role in Russia's program to modernize its economy through technological innovation?

Today what is important is not just buying the latest products or purchasing modern technology. An innovation-based economy can only be called as much, if it has a built-in mechanism for generating and marketing innovative products. Looking at the recent history of Russian-French economic relations shows that the joint development of high-tech innovative products plays a major role. One example would be the Russian regional Sukhoi Superjet 100 aircraft, 30 percent of its components are produced together with French companies.

In addition to technology, France's innovative policies and institutions are particularly interesting for us. It is no accident that the search for new methods of Russian-French cooperation in modernizing the Russian economy is one of the key themes for the French delegation at the St. Petersburg International Economic Forum.

What advice could France give Russia on developing the banking sector and vice versa?

I do not think that anyone is entitled to give advice in this respect. Our banking system and our economies are very different from each other. However, we are definitely interested in the French experience of how the banking sector functions. We also welcome the activities of French financial institutions in our banking and insurance markets, because they are undisputed world leaders. Our French colleagues believe that the stability of French banks is connected to a large extent with their caution, conservatism and strict supervision. This experience is important for us too, although conservatism and rigor can sometimes be excessive and create unnecessary obstacles to trade and economic cooperation.

What differences in economic policy do you see between Russia and France, and how can they be resolved?

Differences in economic policy between Russia and France do not need to "be resolved." They naturally correspond to differences in our two countries' socio-economic situations, in the social and economic aims of the two governments. My French counterpart, Christine Lagarde, and I regularly exchange information about the current economic situation in Russia and France, and about public policy measures, in order to coordinate our actions and, above all, to facilitate joint projects. At the last meeting of the CEFIC, held in 2009, particular attention was paid to the consequences of the crisis. The consensus was that bilateral cooperation and development of trade between the countries had contributed to the improved macroeconomic situation and that protectionism, conversely, only worsens the situation and delays an exit from the crisis.

Interview taken by Alexander Teddy, The Moscow Times

Which sectors do you believe will be priority targets for investments between Russia and France in the years to come?

President Sarkozy restated this at the beginning of March when he received President Medvedev at the Elysee Palace: No sector will fall outside the scope of Franco-Russian cooperation. In order to maintain our position as one of the leading investors in Russia, our current objective is to consolidate the economic partnership in those fields where it is already well-established — energy, infrastructure and aeronautics — and also to diversify our economic relationship by encouraging investments in new sectors of common interest for our two countries: health, innovation and green technologies, for example. We will work on this throughout the 2010 France-Russia year, and of course beyond that. Furthermore, our objective is also to increase Russian investment in France in connection with the "Invest in France" agency.

What opportunities and events in economic relations does the 2010 France-Russia year offer?

When, on January 25, I opened the 2010 France-Russia year, I hoped that it would be beneficial from an economic point of view not just for major companies, but also for small and medium-sized enterprises, and in as many and varied domains as possible. I am very pleased that alongside the major events such as the St. Petersburg Economic Forum, many events have been organized in Russia and in France, both in Paris and in the regions, including invitations of honor by Russia to professional trade fairs on transport, agriculture, health, property and innovation.

These events have brought about changes in the image of Russia in France. Has this development also affected French businesses in Russia?

I would even say that, even during the crisis, French businesses have never lost their interest in Russia! While 2009 was a difficult year for our two economies, no fewer than 17 contracts and agreements were signed between French and Russian businesses last November when Vladimir Putin visited France, and more are expected by the end of the St. Petersburg Economic Forum. Also, the level of exchanges between us has significantly increased. This has been happening for many years; French exports to Russia increased four-fold between 2000 and 2008.

What can France offer Russia?

France is particularly strong in the aerospace, as well as pharmaceutical, cosmetic and chemical products sectors. But we do not wish to confine ourselves just to exporting. Our industries, with a high level of added value, are already involved in the modernization of the Russian economy instigated by President Medvedev. Economic relations between France and Russia are undergoing a thorough transformation: We have moved from a simple client-supplier relationship to a veritable partnership where each of the two parties profits from the expertise of the other in running large-scale industrial projects. In the aerospace industry, Arianespace has already acquired 14 Soyuz launch modules from Russian producers. This cooperation is only in its early stages and we can expect to see it develop further still over the coming months.

What role does France play in modernizing the Russian economy, particularly in terms of technological innovation?

The manufacturing partnerships concluded in the automobile or aeronautics fields, for example, enable our companies to share their skills for particularly promising projects. The regional  Sukhoi Superjet 100, which was one of the sensations at the last Le Bourget Air Show, was fitted out by French and Russian manufacturers in partnership.

State infrastructure is one of the main factors in Russia's development. Where can French expertise be used in this sphere and what cooperation currently exists?

French expertise in infrastructure development, especially in the field of transport, is particularly highly evolved. One of our manufacturers' comparative advantages, beyond their technical expertise, is their capacity to set up public-private partnerships, thereby offering financing solutions for the modernization of Russian infrastructure. Vinci Group's construction of the first section of the Moscow-St. Petersburg highway is, in this respect, an emblematic project, the likes of which we wish to encourage.

What image of itself does France project on the Russian market?

We are very proud that our Russian friends now view France not merely as a country of luxury, but also as a center of advanced technologies and industries of the future.     

Interview taken by Thomas Kerhuel, Le Courrier de Russie

Russia - France 2010
Russia - France 2010
To coincide with President Sarkozy of France's visit to the St. Petersburg International Economic Forum, The Moscow Times is publishing a special edition of its Partnership XXI Century guides. Russia-France is dedicated to business relations between the two countries.
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