Putin Looks for Stronger U.S.–Russia Ties

At the height of the Cold War, few Americans imagined that Russia would have a democratically elected president. Or that he would tell a United States audience that Russia seeks membership in the World Trade Organization, wishes to forge stronger relationships with United States businesses, and welcomes increased foreign investment.

Russian Federation president Vladimir Putin speaks at a packed Stude Concert Hall.

But that is what Russian Federation president Vladimir Putin told a capacity crowd of 770 Rice students and faculty, corporate executives, and NASA officials on November 14. Putin’s speech, given in Stude Concert Hall, was hosted by the James A. Baker III Institute for Public Policy. Following his visit to Rice, Putin traveled to President Bush’s ranch in Crawford, Texas, to continue the leaders’ three-day summit meetings.

James A. Baker, III, 61st secretary of state and honorary chair of the Baker Institute, welcomed Putin, who was then introduced by former president George H. W. Bush. Bush commented on the “strong working and personal relationship” between Putin and George W. Bush and said, “I can tell you our president respects your broad vision of where our two countries can go in the future.” Also onstage were Rice president Malcolm Gillis and Edward Djerejian, director of the Baker Institute.

In his speech, Putin highlighted common interests of Russia and the United States, particularly the energy and space industries. “The scope for possible cooperation in the exploitation of Russian oil and gas could keep us busy for decades,” he said, speaking through a translator. “A lot has been done already to make sure that relations between Russia and the United States are built, taking into account each other’s interests.”

Forging the new relationship entails cooperation in several areas, including science, education, and business. “Today in Russia, we have all the necessary conditions for effective investments in various fields,” Putin said. He pointed to the high rate of economic growth Russia has maintained in recent years. He said the country has made a substantial improvement in the legal conditions for conducting business. The number of business activities requiring licensing—a practice inherited from the former plan-based economy—has been reduced from 2,000 to 104. “Even that is too high a figure,” Putin said, “but we intend to continue to liberalize our economy.

“Perhaps the most important thing is that Russia has reduced the tax burden” Putin said, referring to an issue that has been discussed for almost 10 years in Russia with almost no action. “As of January 2002, the profit tax rate will go down from 35 to 24 percent, and all types of preferential treatment will be revoked,” he said. “In other words, we are strengthening the principle of transparency in our business activities.” He added that Russia has the lowest personal income tax rate in Europe—13 percent.

One of Russia’s priorities is entering the World Trade Organization, Putin said. “We deliberately synchronized this process with our domestic reforms, although we are fully aware that this step is associated not only with benefits, but also with additional obligations.”

Putin noted that the United States, in terms of direct investment to Russia, has fallen behind the Netherlands, Cyprus, and Germany. Pointing especially to Germany as an indicator of Europe’s interest, Putin said he hopes that Americans will accept this as a challenge. “There are many stable sectors in Russia that are becoming an element of sustaining the overall security system,” he said, referring to its energy resources. “Russia continues to be a reliable and predictable partner as a supplier of world oil and other natural resources.” He named the Caspian Sea oil pipeline, which involved U.S. investment, as a success story.

Yet barriers still remain in the trade and economic fields that “should be removed definitively,” Putin said. In particular, he mentioned the Jackson–Vanik trade sanctions, imposed on Russia due to past oppression of ethnic and religious minorities. “[The sanctions] are just a symbol, no one knows of what,” he said. “For our part, we have already taken steps to overcome the obstacles of the past, and now we expect constructive steps to be taken not just by the U.S. administration but also by the American business community.” Putin concluded by saying that in the Russian market, “your risks are much lower than a couple of years ago. I think this is absolutely obvious.”

Putin’s visit was co-sponsored by the Shell Oil Company Foundation, the Russian–American Business Council, and the U.S.–Russia Business Council. A video clip of the speech is available from the Rice Webcast Archive at http://www.rice.edu/projects/baker/index.html.

—Lia Unrau