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. Last Updated: 07/27/2016

Russian-Italian Economic Cooperation

UnknownAntonio Fallico Chairman of the Board of Directors ZAO Banca Intesa KMB-BANK (ZAO)
Italy is one of Russia's leading European partners of Russia, building its relationship on the basis of old traditions in politics, economics and culture. In the last few years trade relations have grown steadily. In 2006 bilateral trade amounted to $30.8 billion, 31.4 percent more than in 2005. Of this amount Russian exports totaled $25.1 billion (up 31.8 percent) and imports from Italy amounted to $5.7 billion (up 29.5 percent). Italian companies present on the Russian market, including Intesa Sanpaolo, Eni, Enel, Tecnimont, Indesit, Finmeccanica, Pirelli, Fiat and Codest, make a large contribution in the development of bilateral relations.

Trade and economic problems are the main themes of bilateral negotiations at the highest level and during intergovernmental consultations in which key ministers of both countries take part. The visit of President Vladimir Putin in 2007 is clear proof of cooperation. Russian-Italian commercial dialogue covers a diversity of strategically important areas: fuel and energy, the space industry, the automotive industry, the manufacturing of household electrical appliances and petrochemical products. Italian companies actively cooperate with Russian companies such as Gazprom, Russian Railways and aviation holding Sukhoi.

A positive tendency can also be observed in the development of small and medium-size businesses, or SMEs. Though the share of SMEs in Russia's GDP remains small at no more than 12 percent, their role in the economy is expected to increase. In view of this, Italian experience is interesting in the realm of creating and developing Italian industrial zones, the use of which could create additional opportunities for both Russian and foreign enterprises. In a number of regions, including Lipetsk, Moscow, Sverdlovsk, Perm and Chuvasia, research is being carried out on the Italian model of industrial districts and in some places has been partially introduced.

A major trend of economic cooperation is also the development of investment and currency interaction. As of June 1, Italian investments in Russia totaled $553 million, of which direct investments made up $386 million. Russian-Italian cooperation in the financial sector has a long history. The experience of the largest Italian bank, Intesa Sanpaolo, which has been operating in Russia for more than 30 years, is a case in point. At the end of the 1970s the then-Banca Commerciale Italiana, saw as its mission the expansion and strengthening of trade between Italy and the then Soviet Union. Today the bank serves about 50 percent of Russian-Italian commodity exchange.

Cooperation between Russian and Italian banks is becoming greater. A lot of Russian banks are in correspondence with Italian partners. Recently a contract was signed between Intesa Sanpaolo and VTB on a 100 million euro credit line, to be used to finance contracts on the delivery of equipment, appliances and services from Italian manufacturers to Russian enterprises.

The financial sector is currently one of the most promising areas in attracting foreign investment. The positive economic state of the market has allowed the generation of favorable conditions for development in the banking sphere in Russia, including in the area of financing foreign trade operations, providing credit, forming a securities market, IPOs and work on the development of venture investments. A lot of foreign financial institutions are showing interest in the Russian market, including Intesa Sanpaolo. In 2005 a deal was closed on the purchase of a controlling stake in the Small Business Credit Bank, or KMB-BANK, occupying a firm position in the area of SME loans.

Italian-Russian relations should continue to strengthen and as a consequence promote strong ties in trade and economic and financial relations between the two countries.