USA-Russia: Will Economics Help Politics?

Politics and Economics in Putin’s Fourth Term

USA-Russia: Will Economics Help Politics?

USA-Russia: Will Economics Help Politics?

Despite Political Tensions, Economists Believe in US-Russian Trade Relations

USA-Russia: Will Economics Help Politics?

MOSCOW – Last Friday, US President Barack Obama approved the Congress decision to repeal the Jackson-Vanik Amendment. This Amendment to the US Commerce Act was passed in 1974 and has long been a stumbling block between Washington and Moscow. The Kremlin called the restrictions on trade discriminatory, symbolizing a conservative and negative attitude towards Russia in general.

After Russia became a member of the WTO, some of the rules of the World Trade Organization came into conflict with the Amendment. This is one of the reasons, experts say, why the law on repealing the Amendment was quickly adopted and signed..

Nevertheless, the law on the normalization of trade relations with Russia, which many US representatives have already called a “historical event”, did not cause any joy or excitement in Russia..

“I see that there will be turbulent economic relations between Russia and the US. At the same time, I believe that in a political sense, relations between the countries will be bad ”

Anders Aslund, Washington-based Peterson Institute for the World Economy.

The fact is that the repeal of the Amendment was combined with the approval of the “Magnitsky law”. It imposes visa and financial sanctions against Russian officials who have been accused of human rights violations but not prosecuted at home..

The State Duma, expressing its indignation, immediately began to prepare a response. The new Russian bill has already passed its first reading. It is expected to be amended shortly. The bill introduces many sanctions, both against violators of the rights of Russians or people involved in the deaths of Russians, and against NGOs funded by the United States. The deputies themselves call the new document “The Law of Dima Yakovlev” – after the name of the adopted boy from Russia, who, through the fault of his American adoptive father, died, locked in a car.

Russia and the USA are equal trading partners

US Ambassador to Russia Michael McFaul wrote in his blog that the new American law not only extends to Russia “the status of permanent normal trade relations”, but also “reaffirms America’s commitment to protecting human rights and seeking justice for those whose rights are violated. “.

“This important law will benefit both Russia and the United States as it will help expand trade between our countries, create new and better jobs and increase mutual investment, which is necessary to support economic growth in both countries,” writes McFaul. – According to some estimates, Russia’s accession to the WTO and the extension of the status of permanent normal trade relations to Russia could pave the way for a doubling of American exports to Russia over the next few years – up from the volume of US $ 8.3 billion in 2011 – and so create new jobs in manufacturing, agriculture and services “.

“This is a historic law that will bring great benefits to us and Russia,” – quoted by “RIA-Novosti” Deputy Spokesman for the US State Department Patrick Ventrell.

Can politics hinder the economy?

The official commentary of the Russian Foreign Ministry showed the open discontent of the Russian authorities: “If Washington thinks that granting Russia a regime of normal trade relations can be” exchanged “for undisguised interference in our internal affairs, then this is a short-sighted and dangerous position.”.

In those days, a scandal erupted over the ban on the import of American meat into Russia. Despite the fact that the Rosselkhoznadzor substantiated the ban and recalled that it had warned about it in advance, many still linked the incident to the Magnitsky Act and Russia’s attempt to “take revenge” on the United States..

Nevertheless, Russian and American economists are confident that no political conflicts can seriously affect trade relations between the two countries..

For example, answering a question from the Voice of America correspondent, Anders Aslund, a leading researcher at the Peterson Institute of World Economy in Washington, said that politics and economics will stand apart from each other..

“I see that there will be turbulent economic relations between Russia and the United States. At the same time, I believe that in a political sense, relations between the countries will be bad. But these two questions will stand much more separate and far from each other than before, ”says the economist. – Incidents like this with the supply of meat, of course, will happen, but economic cooperation will be too important for Russia. And such small things will not affect the situation in the future. Although individual cases are possible, but where someone’s interests are involved “.

“I think that the main focus of the Russian government will be close cooperation between Russia and the United States. The cancellation of the Jackson-Vanik amendment just gives confidence to both sides that there are no formal political obstacles, ”explains Aslund. “Moreover, there are now many representatives of large American companies in Russia who are happy to invest in this country and develop their business”.

In a conversation with the Voice of America correspondent, Sergei Guriev, rector of the Russian School of Economics, president of the NES Center for Economic and Financial Research and Development, said that “the cancellation of the Jackson-Vanik amendment is a wonderful event.”.

“Accession to the WTO is one of the last chords of the ‘reset’ policy, which developed from one significant achievement to another, and I, as an economist, am very glad that the ‘reset’ was not limited to political, strategic, military achievements,” says Guriev. – In general, I would say that Russian-American relations are not at such a good level now as they were in the past few years. Nevertheless, both the victory of President Barack Obama and his recent declarations indicate that America is ready to continue the “reset” policy, namely in cooperation areas, where there are mutually beneficial interests and open discussion of the problems that arise in our relations. “.

According to Guriev, of course, “the Russian authorities are going to somehow respond to the“ Magnitsky law ”. However, according to the expert, “the achievement of Russia’s accession to the WTO lies in the fact that trade sanctions cannot be unpredictable and dishonest.”.

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