“The commission is very important, and I don’t think you can do deals without some government involvement and the blessing of both governments,” said Edward Verona, head of the U.S.-Russia Business Council.
“Corruption, the rule of law and bureaucracy are easier to address through this channel … instead of individual companies going to the press and announcing that they may be suspending their investment in the country,” he said.
The commission, agreed upon during Obama’s two days of talks in Moscow this week in his first visit to Russia as president, will aim to boost trade, which was just $36 billion last year — as much as Russia trades with Poland or the United States with Thailand.
Russia and the United States had a high-level inter-governmental commission with a different composition back in the 1990s, but it was abolished as relations between the two chilled this decade.
The new presidential commission will be chaired by Obama and Medvedev and coordinated by U.S. Secretary of State Hillary Clinton and Foreign Minister Sergei Lavrov. Its members will cover various areas, including business, nuclear issues, science and technology, and civil society. The business section will be headed by U.S. Commerce Secretary Gary Locke and Economic Development Minister Elvira Nabiullina.
Verona said business is placing high bets on good relations between Obama and Medvedev because the accountability of the commission ultimately rests on them.
“The chemistry between the two presidents was very positive. Nobody is building false expectations on the strength of their personal relationship but that they get along is a good thing,” said Verona, who previously worked for the U.S. Embassy in Moscow and oil majors in Russia and other former Soviet republics.
The new commission will have an energy section, and Verona said he hoped the energy dialogue between the world’s largest energy exporter and energy importer would be revived.
Recent deals with European majors Total and Shell suggest resource nationalism may ease.
“There may be a growing awareness there is a risk of geological decline in Russia’s existing fields leading to an eventual shortfall in production for export and domestic consumption over the next five to 10 years,” he said.
U.S. majors ExxonMobil and Chevron have said they want changes in Russian laws that cap foreign involvement in top resource-focused firms at 10 percent and order foreigners to hand back deposits for a small premium if exploration confirms that they are of strategic importance.
“The [Russian] government may be aware that investment capital is scarcer than it was a year or two ago and they need to perhaps create conditions to make it more attractive for foreign investors,” Verona said.
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