France Leads the Way With Post-Sanctions Trade

PHOTO by Pavel Lisitsyn / RIA Novosti
Russia and France seek to rebuild economic ties after Ukraine

With relationships between Russia and the West still tense, it is Paris who is leading the way in reviving post-sanctions ties with Moscow.

The French business elite, unlike German or American counterparts, are striving for the end of sanctions. Stéphane Le Foll, French Minister of Agriculture, visited Moscow twice in the past several months, hoping to persuade the Kremlin to at least partially lift counter-sanctions targeting European suppliers.

Despite lingering tensions from the Ukrainian crisis, France became a key investor in the Russian economy in 2015. Today, it is the largest European employer of Russian citizens, a trend that the Kremlin is keen to continue. Igor Burakov, director of the Rostov Oblast Agency for Developing Investment, has even admitted being ready to “cuddle” French entrepreneurs if it means their continued interest in Russia.

A special delegation designed to woo the French business elite arrived in Paris this week with Russian representatives promising a one-stop-shop approach to those concerned with corruption and red tape.

The stranglehold of sanctions is unlikely to change any time soon - but here are three top trends from the French-Russian business meeting that mark a bright future for trade.

France is interested in investing into Russia’s green business

Eco-friendly Business

In perhaps a surprising move for many Russian businesses, French entrepreneurs told visitors that they considered eco-friendly business to be a priority.
Russia has done little to prove its green credentials. At the United Nations Climate Change Conference in December 2015, Kremlin officials boasted of plans to halve industrial atmospheric emissions compared those in the late USSR. Fact checkers not only found that this milestone had already been reached in mid-90s, but attributed it general de-industrialization rather than eco-friendly efforts. The revelations left Moscow red-faced and battling a reputation of a country disinterested in green economy. Direct talks between French businessmen and Russian governors have made it clear that developing eco-industries were still on the table for both parties. French entrepreneurs have talked in particular about supplying air purifiers in Siberia, a current concern for local officials.
The devastating flooding in the Ishim region, caused by huge amounts of melting snow, was also discussed, and both sides showed interest in finding the technology to fight similar tragedies. The representative of the Siberian region added that he was set on developing a wide range of ecological projects, promising concessions to foreign recycling businesses in the area from 2017.

A New Kind of Investment

Any negotiations between Russia and Europe have traditionally been dominated by fossil fuels. Yet with the promise of low oil prices and a weak rouble lingering, the Russian delegation were keen to target different sectors: pharmaceuticals, food industry, tourism, education and airline industry. Although the economy remained a concern for some, Dmitry Yalov, deputy Prime Minister of Leningrad Oblast, said that the he expected oil prices to stabilize within one to two years.

Boosting Regional Economies

Boosting the economy of Russia’s provincial areas was also a top concern, with representatives from 8 separate regions taking part in the meeting. Tourism is seen as a key sector to promote, and French airlines are taking an interest in the Russian market. The possibility of direct flights from France to the newly opened airport in the Kaluga region was welcomed by both sides.

Deputy Governor of Krasnodar Krai Sergei Altukhov also outlined possible collaborative tourist projects with France. A Russian version of a famous French skiing resort Courchevel could soon be appearing at Lago-Naki, a mountain plateau with alpine meadows, located in Adygea and Krasnodar Krai.

Panorama plato l n
Meseta Lago-Naki

The subject of the so-called “monotowns”, cities whose economies are dominated by a single enterprise, was also a theme for the meeting. With these regional enterprises often hemorrhaging money, the modernization of these monotowns has been made a national priority in Russia. It’s hoped that French businessmen will come to the rescue of these cities thanks to an extremely favorable fiscal regime: that would see them exempt from many federal and regional taxes. Reconstructing old industrial zones is an area of expertise that Russia is keen to tap into.

Author: Igor Gashkov (Paris)