| I’m delighted to be here and to see so many leading
business people, investors and opinion formers from Britain and Russia
- a testament to our increasingly strong relationship.
I know you’ve already heard from Digby and Supachai and will hear from
Sir Roderic Lyne and Clara Furse later today, so let me welcome you all to
London, and wish you a successful conference.
It was over 450 years ago, that Richard Chancellor sailed from Britain
to Russia and secured the right to free trade from Tsar Ivan IV. An
insightful move by the Tsar, who knew that greater trade would lead to
greater prosperity, diplomacy and security between our two countries.
The same stands true today. Our prosperity and our security are
intertwined.
And our economic ties form the basis of this.
There are 400 British companies operating in Russia. In 2003, the UK
was the largest foreign investor with 15% of the total coming from British
sources.
And these ties are forever growing. It is just two years since I last
addressed this forum. But, in that time
- our exports have gone up almost 50% to £1.5 billion;
- our two countries have signed an energy pact, which should lead to a new
gas pipeline between Russia and Britain; and
- BP has entered into a joint venture with TNK worth almost $7 billion.
Shell is leading the international consortium developing the Sakhalin II
oil and gas project, which will see investment of up to $10 billion.
Growing ties between Britain and Russia have even hit the public
consciousness, with Roman Abramovich’s purchase of Chelsea Football Club.
Over the same period, in Russia, incomes have gone up by almost 20% and
poverty has plunged. Five years ago, almost 1 in 3 of the population lived
in poverty. Today, that figure is 1 in 4.
There is still more to do tackling poverty in Russia, but with such
huge change over the last two years, we must wonder where Russia will be
in the next two years.
Russia will still be energy rich, will still have an educated labour
force, will still have a reformed industrial base. But could also, just in
two years, be members of the WTO, enjoying even closer political and
economic ties with the EU and growing faster than any other European
country.
No longer semi-detached, but at the heart of the global economy, vital
to Europe’s future and a key strategic partner for Britain.
So, today, I want to issue a challenge to British businesses. To grasp
the opportunities of this more prosperous, stable and outward looking
Russia. And to grasp them today because they will be lost tomorrow.
Global reach and foresight are vital tools in the modern economy, with
increased trade and openness.
Take China, the most populous nation in the world, set to be the
largest economy in the world in a generation.
Ten years ago, it’s potential for growth was clear. But we missed the
boat.
As a result, Germany now exports 8 times as much to China as we do.
We’re catching up now. But I’m determined that this won’t happen again.
And Russia shows every sign of being the next China, but closer.
UKTI, the trade and investment wing of the British Government, can help
companies looking to make that first flight - meeting buyers
at trade fairs, exhibitions, seminars and other events, as well as on
supported trade missions.
The British Embassy in Moscow and the British Consulates General in St
Petersburg and Ekaterinburg also work hard to maintain links with the
Russian regions.
So:
- UK Trade and Investment can offer expert advice and assistance to
British companies, large and small, who want to expand into Russia;
- I’m going to Moscow in June for the next UK/Russia Intergovernmental
Steering Committee on Trade and Investment that I co-chair with Finance
Minister Kudrin, who’s sharing the platform with me today;
- We’ll continue to make sure Britain is the location of choice for
Russian business. We’ll maintain our economic stability and build up our
excellent science base and financial services sector.
It’s not just about challenges for British business though. The reason
that China has experienced such rapid growth is because of reform at home
and abroad. So there are challenges for Russia too.
The business people that I speak to have been very impressed with the
programme of economic reform instituted by President Putin.
The labour market has been freed up; ownership laws tightened; and
Russia can boast the lowest income tax in Europe (13%), and a business tax
rate of 24%.
The EU and the US have already granted Russia formal “market economy”
status in recognition of all this, but there is still more to do at home
to make Russia more attractive to investors. In particular, the banking
sector needs further reform to bring it into line with international
standards.
Further reform at home will underpin reform abroad, as Russia looks to
strengthen further its relationship with the rest of the world.
Europe is Russia’s home - culturally, historically,
geographically, politically and economically. Europe already accounts for
40% of Russia’s trade. After enlargement, this will be more than half.
The last EU-Russia Summit saw further commitments to working together
on combating terrorism, promoting trade and linking better on science. We
look forward to building these links even further within an enlarged EU.
And helping as Russia looks to accede to the WTO on the right terms.
But Russia must help us too. Energy is one of the more difficult issues
where we must see more progress. I very much hope there might be some
movement when President Prodi sees President Putin in Moscow later this
month.
Let me close by wishing you all every success for the rest of the
conference. Our relations are better than ever before. As Russia grows, so
does Britain.
The contacts that you are making today will not just enrich your
companies, they will enrich our countries. And they will raise prosperity
and security for all of our citizens - in Britain and in
Russia.
Thank you.
|
