Public Remarks
Remarks to American Chamber of Commerce Annual Investment Conference
William J. Burns, U.S. Ambassador to Russia
Marriott Royal Aurora Hotel, Moscow, Russia, April 23, 2008
Thank you for that kind introduction. I truly am honored, once again, to join all of you today. Nothing has given me greater pride or satisfaction over the last three years than the chance to work with the American Chamber of Commerce, a group of people for whom I have nothing but the highest admiration and respect. Long after I have departed my post as the American ambassador, I know that all of you will continue to contribute in enormously important ways not only to the bottom lines of your companies, but also to Russia's economic future and corporate culture, and to better relations between our two countries.
Two weeks ago in Sochi, during President Bush's visit to meet President Putin and President-elect Medvedev, I was reminded of many things. I was reminded at dinner the first evening of how lucky I was to be sitting far enough down the table to avoid being dragged up on stage to dance with a wonderful Cossack folk troupe, who would have been unimpressed by my Irish-American sense of rhythm, and tempted to give up entirely on our bilateral relationship.
Having survived that episode with my dignity more or less intact, I was also reminded during the discussions which followed of how much the complicated U.S.-Russian relationship still matters to both of us, and to the rest of the world. The Strategic Framework Document which our two Presidents issued is not exactly light reading, and it does not attempt to paper over some very real differences between us, but it does highlight very clearly how much we both have to gain by working together to prevent the spread of nuclear weapons, set a good example in how we protect and reduce our own remaining arsenals, develop civil nuclear cooperation, fight terrorism, and help settle regional conflicts. And that document, in all its deathless bureaucratic prose, offers another reminder too: our economic ties are growing fast, in ways that could shape our relationship far more significantly in the years ahead than at any moment in its first two centuries.
Russia has before it today a moment of considerable opportunity -- a moment that history tends to offer rarely and stingily, a moment unimaginable when I last served in Moscow in the mid-1990s, and a moment that was just emerging into view when I returned as Ambassador three years ago. You can all paint the picture as well as I can. In bright colors, we see a trillion dollar-plus economy, now the ninth largest in the world and perhaps the fifth largest by 2020, with huge hard currency reserves, a rising middle class, fewer people struggling beneath the poverty line, and growing appetites around the world for all of Russia's vast raw materials. With 14 million Russians traveling outside the country last year, 40 million internet users, and 3 million bloggers, a whole generation has grown accustomed to its connections to the rest of the world, and grown aware of all its possibilities.
But any honest portrait holds darker shades too. Success today is too dependent on hydrocarbons, and tomorrow may not be so kind. Corruption and bureaucratism are serious impediments to sensible economic choices, and deeply depressing for the hopes of small and medium sized entrepreneurs. Rule of law is a nice slogan, but unevenly applied, to put it politely. Institutions are fragile, and infrastructure is crumbling. Education and health care systems, so critical to realizing the promise of Russia's enormously talented people, need desperately to be rebuilt. Overcentralized decision-making may be the way to regain control over the commanding heights of the economy, but it's a weak model for the challenges just ahead, for innovation and diversification beyond oil and gas. And overcentralized power may be popular today for repairing some of the inequities and vulnerabilities of the past, but it's a weak long-term model for protecting the hard won property rights and personal freedoms achieved by Russians over the last couple of decades.
Russia has surely come a very long way economically in a very short time, through a period of hardship and uncertainty and lost pride that is hard for people outside Russia to understand. I do not doubt the capacity of this society to succeed in its next phase, or to take advantage of the moment of economic opportunity before it.
President-elect Medvedev's public statements in Krasnoyarsk and elsewhere offer an encouraging sense of purpose. Russia certainly has the resources today to invest aggressively in its physical, human and institutional infrastructure. Innovation and growth in the technology sector are always possible amongst a people as well educated and skilled as Russia's. The passage of the strategic sectors law, and far more importantly its consistent implementation, can help make the rules of the road for foreign and domestic investors more transparent and more predictable. While questions are emerging about drops in Russian oil production and future shortfalls in natural gas production, there is still plenty of time for Russia to invest sensibly in infrastructure and attract foreign partners.
Corruption can be combated, piracy of intellectual property can be reduced, and bureaucratic red tape can be cut. Rule of law can become more than a slogan, especially given the interest of a new generation of property owners in protecting what they have and how it is exchanged. But all these tasks will require a real sense of urgency over the next few years, and a constant battle against complacency. As one of my favorite American philosophers, Will Rogers, once said: "Even if you're on the right track, you'll get run over if you just sit there."
America is not a disinterested observer of Russia's economic course. American investment in Russia has increased by about 50% each year during my tenure as Ambassador, and Russian investment in the United States is increasing just as fast. For all the concern sometimes expressed about America's foreign investment regulations, the truth is that no Russian investment in the United States has ever been turned down in the CFIUS process. Severstal is now the third largest steelmaker in America. International Paper and Pepsi-Cola have recently made billion dollar-plus acquisitions in Russia. Two-way trade has grown by an average of nearly 40% per year in the last few years. More than 100,000 Russian jobs can be traced directly to American businesses or investments.
Alongside jobs have also come real contributions from all of you to the modernization of business practices and corporate governance in Russia, the tools Russians need to compete in the global market. Boeing's overall business in and with Russia totals in the tens of billions of dollars over the coming years, and the Russian Regional Jet project is an excellent example of technology partnership. Despite all that, bilateral trade and investment numbers are still far beneath their potential, and much more is possible in the years ahead.
That will be particularly true as Russia completes its integration into global economic institutions. WTO membership should be achieved in 2008, and President Bush reaffirmed in Sochi his commitment to doing all we can to help meet that goal before he leaves office. We have also begun negotiations of a Bilateral Investment Treaty. We are reviving the habit of systematic U.S.-Russian engagement on economic issues, with a senior government-to-government dialogue set for its inaugural session in Washington next week, and Secretary of Commerce Gutierrez planning a visit to the St. Petersburg Economic Forum in June to explore ways of restarting business-to-business dialogue. And as a new American Administration organizes itself after our elections later this year, it will see an economic relationship with Russia with increasing significance for both our overall ties and Russia's future direction.
I have now lived in Russia for a total of five years. It will be hard to leave. For all the frustrations, for all the ups and downs in relations, for all the missed opportunities and misunderstandings, for all the disagreements that still afflict us, for all the uncertainties about the future, I will always view Russia and Russians with real fascination, affection and respect. As Ambassador, I've been able to take more than 40 trips around the country, from Kaliningrad in the west to Chukotka, 11 time zones to the east, and only 30 miles across the Bering Strait from Alaska. I have seen what's possible in this vast society, and the formidable problems that remain. I will leave with a fair amount of humility about the ability of any outsider to fully understand, let alone influence, the course of events in Russia. But I will leave also with an abiding sense of the importance of relations between our two countries, and of the value of working hard at them.
Once again, thank you so much your invitation this morning, and for the chance to work with you over the last few years. I wish you all the very best, in business and in life, and I hope our paths cross many times again.