THE U.S.-RUSSIA BUSINESS COUNCIL "TRADE AND INVESTMENT FORECAST" CONFERENCE
Remarks by Yuri V. Ushakov Ambassador of the Russian Federation to the USA March 21, 2000, Washington, D.C.

Ladies and Gentlemen,

It's a great honor for me to address the Annual US-Russia Trade and Investment Forecast Conference. I am pleased to follow in the footsteps of two good friends of mine - Bob Strauss and Eugene Lawson. I think that having worked together for more than a year we have really made a good "troika" team. Bob and Gene possess extraordinary professional and personal qualities, not the least of which is their vision for the future. It is this vision that shapes this conference taking place only a few days before Presidential elections in Russia.

Make no mistake - I do know who is going to win in these elections. By the way, it is somewhat easier than predicting the outcome of the US Presidential race in November.

It's really hard to place the bets, given the unusual twists and surprises of the primaries' season. Any predictions on who will take the lead in November is premature and best described by an anecdote coming to my mind. A voter is asked what he thinks of two candidates and who is going to win. "When I look at them", he replies, "I am thankful that only one of them can get elected".

Coming back to serious business, I would like to stress once again that this conference is very timely. Russian elections will necessarily create favorable conditions to undertake a decisive all-out effort to push forward economic reform. This will be our "second chance", so to say, a second phase of reforming which must be deeper and go much further. It should also take into account past mistakes of our own and on your part as well. In this connection the unique expertise of the US-Russian Business Council will be in high demand.

The expectations in Russia are high and the stakes are even higher. Stability is priority of the day. Russian people and the Russian state face a challenging opportunity, though a very promising one, to decisively move on in making our country prosperous, economically sound and strong.

The new President of Russia is to form a new pro-reform Government capable to work effectively and constructively with the new Duma. Serious in-depth analysis of unfinished business, as well as intensive brain-storming is taking place to work out a comprehensive Agenda for the Nation. Its underlying principle is to ensure stable political and social environment. The State should act as a guarantor of fair and equal rules of the game for all economic operators.

So, the necessary ingredients for a breakthrough seem to be there, including the political will to make tough decisions. We have effectively overcome the aftermath of August 1998 financial crisis which was very painful. Speaking frankly, there were three defaults - one that hit the Russian economy, the second one that struck our people and the third one that affected many of those abroad who put their energy and faith in Russian economic revival.

Lessons of defaults will not be lost in vain. We are taught by our previous experience. With all the knowledge we have now, there is a potential to go forward. There are visible signs of slow, but steady improvement of the Russian economy. Consumer confidence is now growing and the middle class is reappearing. Let me put some figures to make the point. Believe me, they are true - it's not Soviet-time statistics.

According to the latest forecasts, in the year 2000 the growth of Russia's gross domestic product may reach 3 percent, agricultural output is expected to rise by 3 percent, investment - by 2 to 5 percent and the industrial production - by 4 to 5 percent. The inflation may drop to 20 percent as compared to more than 40 percent last year.

Besides attaining economic and political stability, the new leadership of Russia will, of course, face other hard tasks after elections.

Chechnya is still the most urgent and painful issue. Now that the active military phase of the effort to bring Chechnya back into the Constitutional framework is nearly completed, we face a monumental task to restore normalcy, ensure decent conditions and well-being of our citizens there.

Large-scale tasks lie ahead in socioeconomic sphere. There should be no doubt that the new Russian Government will pursue a strategy of tight monetary policy combined with the creation of a meaningful social safety valve. The list of what is to be done is long, but one of its primary points is the adoption of new laws promoting foreign investment. Also on the agenda are tax and land reforms, protection of property rights, reduction of capital flight, tackling problems of money laundering, organized crime and corruption.

We appreciate your advice and assistance, but most of all - your confidence and active involvement in our economic reconstruction. The role of foreign investment in this undertaking is pivotal.

Guess, what is the common point in the programs of all presidential candidates in Russia? It is strong support for foreign investment. This unanimity tells you something. The Russian Government's Consultative Council on Foreign Investment, recently held in Moscow, showed that there are great opportunities for cooperation. As Russian Ambassador, I invite the U.S. companies to take a lead in this process.

To be frank, I am worried by stagnation in our economic relations with the U.S., one of our best and largest trade partners. During the 90-s positive trends and steady growth were prevailing in Russian-American trade. The turnover reached the high point above 9 billion dollars in 1998. However, things have changed to the worse. Last year the volume of trade declined 23 percent and fell to 7 billion dollars. Why don't we make a fresh start? It is new Millenium, new opportunities.

Cautious wait-and-see attitude of many American companies should give way to bold initiative. Time is right. The Russian market is vibrant and highly promising. Of course, some courage is needed, but the risk is definitely worth-taking and the profits can be enormous. Doing business in Russia is not easy, but, as Russians say, "those not willing to risk, do not drink champagne".

We also welcome help in nurturing new business philosophy, new business culture in Russia. A culture focused on investment and production instead of exuberant personal consumption. A culture that will give away with the negative image of a "new Russian" best illustrated by a popular joke. At a Moscow boutique a businessman boasts to his partner that he bought a necktie for 1 thousand dollars. "You, idiot", says the other, "I took the same one for 2 thousand dollars across the street".

Again, my message is - come together, come to Russia, it is time to get involved. In this connection I want to share with you an important initiative which has been discussed between Vladimir Putin and Bill Clinton.

The concept is as follows. Some time after our election a group of US business leaders comes to Russia. It has to be a very strong elite team which includes those who can shape public opinion, real economic heavyweights. This team will measure the situation, voice its concerns, give us valuable advice.

It will have access to Russian leaders instrumental in solving issues, meet with the new President of Russia. Its job is to give an honest signal back home - invest in Russia.

Bob Strauss knows about this initiative. I think that he can be the driving force behind such undertaking. The US-Russia Business Council can take the lead now and make things happen.

I feel confident that having played an important part in sustaining US-Russia business ties through the years, members of the Council will now become more active than ever working with Russia. Let someone argue whether Russia is lost and who is responsible. We are practical and pragmatic people and I can say with confidence that the Council has never lost its touch in doing business with Russia.

I wish success to the Conference which is attended by many representatives from the Russian Federation whom I respect and regard highly.

Thank you.

Publication of the Ministry of Foreign Affairs of the Russian Federation.