On why European business people and industrial producers prefer to invest in the Russian economy and start up the production in Russia; the influence of the new system for economic exchange (Blockchain, Bitcoin) and on the latest models of joint international cooperation; all in an exclusive interview by Planet360.info to ROMAN TEREKHIN, managing partner of Moscow’s law firm “Delovoy Farvater”, Consultant to the Federal Duma and Government.
– The St. Petersburg International Economic Forum took place in Russia not so long ago under the flag of Italy. Its participants discussed numerous issues. International economic cooperation was one of the key discussion points. Businessmen and politicians are trying to find ways to promote mutually beneficial cooperation, building on the new economic realities in which we are all living. Speaking of Russia-Europe cooperation, what’s your take on future economic cooperation between Russia and the EU?
– Not only do businesses create a variety of goods for the people, but they never stop looking for ways to use resources more efficiently. Recently, we have witnessed on many occasions how political views become a serious obstacle to promoting economic relations between countries and regions. However, despite even the most categorical differences of opinion, businesses set up their high-tech production facilities in communist China. Looking to the not so distant past, there’s Fiat, a company thanks to which the Soviet Union started making vehicles, many of which are still running. This clearly shows that economic laws cannot be canceled at the behest of politicians. I believe that economic globalization is a fairly powerful process which nobody can stop. In 2015 alone, Russia opened 30 percent more joint ventures and foreign enterprises on its territory than in 2014. The total number of such companies is approaching 25,000 with a total turnover of over RUB 40 trillion per year. I think that this process will continue, and Russia – represented by its businesses – will always be a good partner and a good friend to our European colleagues.
– SPIEF highlighted how international businesses are increasingly drawn to Russia regardless of the sanctions recently renewed by the EU or statements by politicians. In turn, Russia said it welcomes active participation of foreign companies in Russia’s import substitution programs and production localization projects. Italy is a case in point. It continues to invest in Russia. For convenience, and in order to circumvent the embargo, we created an innovative template for joint Russian-Italian business cooperation which we dubbed Made with Italy, which allows us to set up joint ventures in a vast number of industries. What other types of joint international cooperation are available? Can Russia offer conditions that would encourage foreign companies to consider entering the Russian market?
– Judging by the fact that lots of joint ventures are opening in Russia, cooperation with Italy is going well: new production facilities have opened in Orenburg, Chelyabinsk, Kaluga, and the Moscow Region. It’s not only about manufacturing machine tools or production equipment. Italian businesses design furniture and clothing and provide hotel and restaurant services. Of course, establishing relations between the entrepreneurs of our respective countries is critical for successful operation of such major projects.
I can give you an example of another promising area, which is the Italy-Eurasia Chamber of Commerce. The significant demand for Italian wines and foods may soon be met in Russia. Projects are underway to grow grapes and make wine, build buffalo farms and make mozzarella in the Crimea, which is the Russian region closest to Italy in terms of climate and natural conditions. Russian law has no special regulations regarding companies with foreign capital – they operate just like any other Russian business. Such enterprises are important for Russia, since they pay taxes to the state budget, create jobs and produce necessary goods and services. In 2017, Russian tax authorities plan to move communication with foreign companies that sell certain goods in Russia online. This will be done for the first time, but in the future this approach may be applied to foreign businesses which want to incorporate in Russia.
– How will country-to-country economic disputes be resolved in such difficult circumstances?
– Russian law recognizes the primacy of international law (Part 4, Article 15 of the Russian Constitution); therefore, a significant portion of cases will be adjudicated according to international treaty rules. In complicated cases, when doing is difficult, the laws of the country that has more to do with the subject of the dispute will prevail. For example, if we are talking about investments in a Russian company, the founders from different countries will have to comply with the Russian Civil Code. By the way, according to the Civil Code, they can agree among themselves on which country’s laws will be applied during disputes. So, it’s up to contracting parties to decide on the jurisdiction. However, in case of problems arising in the sphere of consumer protection (if someone is unhappy with the quality of work of a particular joint company), such disputes shall be taken only to Russian courts, since both the enterprise and the consumer are located in Russia.
– Clearly, the global banking system is experiencing a major problem. Can the situation be remedied, or should this system be replaced?
– People always had money problems, and modern times are no exception. As a universal equivalent of value and a means of payment, money turned out to be an imperfect tool, but we are unlikely to ever go back to barter. However, the availability of powerful computer systems, which literally permeate the modern world, may allow us to drop paper money and create a new monetary system ensuring equal and fair settlement between producers and consumers, employers and employees, and households and grocery stores. Modern banking transactions take place somewhere in cyberspace beyond the real world. They are nothing but a record in an electronic register, which we all put our faith in. Our trust is not less than past trust in gold bullion, a bank bill or a check. As a matter of fact, this trust underlies the existence of money circulation, which can be completely replaced by an electronic settlement system, such as blockchain.
– Is it possible that current geopolitical tensions are caused by economic uncertainty or depleted sources of growth?
– I think of geopolitics like an island with volcanoes. Some of them are dormant, while others keep erupting violently, smoking and constantly sending tremors throughout the surrounding area. The interests of politicians primarily revolve around protecting and developing the state. Having said that, defense and the economy can be identified as their top priorities. Economics has always recognized the fact that our desires exceed our capabilities and available resources many times over. That means that resources and sources of growth are always in scarce supply. Some people, like the Japanese, patiently and painstakingly work in the environment that took shape in their country historically, while others will need to take something away from their neighbors in order to be successful. However, wars have never been beneficial for national economies, and we are losing a lot through the economic sanctions and blockade. If aggressive politicians don’t see it right away, after a while life will point out their mistakes.
Interviewed by Dr. Elena Buldakova
Roman S. Terekhin’s Biography:
In 2004 he graduated from the Moscow Aviation Institute, as engineer specialized on “Sighting and navigation aircraft systems”.
in 2009 he graduated from the Open University Business School (UK), where he received an MBA certificate.
in 2013, he received the Master of specialty “Jurisprudence” (summa cum laude) at the Russian Law Academy of the Ministry of Justice of Russian Federation.
He currently is the head of an independent center of expertise, «Obchestvennaya Duma» (“social thinking”), conducting public examination of bills proposed by the State Duma deputies.
He also is currently the Managing partner of the Moscow law firm «Delovoy Farvater» (“Business fairway”).
