Switzerland is offering a helping hand in Russia’s drive to upgrade its economic infrastructure, but dismantling the country’s unwieldy bureaucracy could take a long time.
Swiss Economics Minister Johann Schneider-Ammann signed a deal on Wednesday with his Russian counterpart Elvira Nabiullina promising cooperation in Russia’s modernisation drive.
The declaration reinforced an existing action plan, that last year was extended until 2013, offering Swiss industrial and research expertise to assist the process of upgrading Russia’s infrastructure and economy.
“I am sure that Switzerland, with its modern economic structure, its potential in know-how and innovative high technology products, can be an interesting partner for Russia in the process of realising its ambitious modernising efforts,” Schneider-Ammann told Moscow’s chamber of commerce on Monday during a four day trade mission to Russia.
After the signing ceremony he said it was now up to businesses to find partners and to get an entry into the Russian market. He pointed out that this cooperation would help preserve jobs in Switzerland.
Switzerland’s stated mission in Russia is to concentrate on aiding economic reform while avoiding political interference. In concrete terms, this can be seen in such things as trade delegation visits and the participation of Zurich’s Technopark and the Federal Institute of Technology in the Skolkovo high-tech industrial park being built near to Moscow.
But it is also evident in Switzerland’s international efforts to bring Russia into the World Trade Organisation. Russian negotiations with the WTO have already lasted 20 years with no immediate conclusion in sight.
Schneider-Ammann described Switzerland’s external economic strategy as including mandates to encourage internationally recognised trade rules and to “integrate the largest possible number of countries into the global economy”.
Russia’s accession to the WTO partially hinges on it ditching protectionist measures that favour domestic industries – a reform that would aid Swiss companies trying to enter the market.
Such a move would also help to seal a free trade agreement (FTA) currently being negotiated between the European Free Trade Association (Efta) states, of which Switzerland is a member, and the customs union of Russia, Belarus and Kazakhstan.
The FTA and Russia’s WTO accession are therefore closely linked, although the one does not depend on the other.
Switzerland is also asking Russia to support its continued membership of the International Monetary Fund (IMF) executive board. Through this seat, Switzerland represents the interests of the Central Asian countries which were formerly part of the Soviet Union.
Schneider-Ammann has additionally asked Russia to include Switzerland in the deliberations of the G20 meetings of the world’s most powerful nations. Russia holds the G20 presidency in 2013 and Schneider-Ammann wants Switzerland to play a role.
“If we cannot get a seat at the table during the full meeting, Switzerland should at least have some influence during its preparatory stages,” he told reporters.
The issues are of such importance to Switzerland that Foreign Minister Micheline Calmy-Rey – who is also this year’s Swiss president - joined Schneider-Ammann in Russia this week to hold talks with Russian President Dmitri Medvedev.
The two presidents were present at the signing ceremony of the cooperation deal.
Calmy-Rey said relations between Switzerland and Russia were "excellent" and she praised the progress made in mutual cooperation.
There is potential for further development in the areas of finance, technology and energy, she said.
The talks also covered the situation in the southern Caucasus region as Switzerland has a special mandate to represent the interests of Russia and Georgia in their conflict.
Under Medvedev’s presidency Russia has embarked on a massive programme of reform, upgrading its energy infrastructure, remodeling its economy to be less dependent on oil and gas, and introducing political reforms to invigorate democracy by reducing the state’s influence in the economic markets.
But the plan is being viewed with some suspicion both within Russia and outside its borders because it requires the entrenched political elite to loosen their hold on power – and the riches this power generates.
“Government influence increased dramatically in the last ten years right across the spectrum,” Vladimir Kuznetsov, a key figure in the Russian Renova business group and a board member of Swiss industrial firm Sulzer, told swissinfo.ch.
“Right now there is an understanding at the top of the Russian political establishment that this is a process that is becoming counterproductive to efficiency, openness of the economy and fighting corruption.”
“The reality is that decreasing the role of government in the economy cannot happen overnight because we are talking about a big machine with a life of its own.”
After meeting Russian government ministers during his visit to Moscow, Schneider-Ammann also acknowledged that reforms will not be easy.
“The ministers that I have met are well aware of these problems,” he told reporters during the trade mission that ended on Wednesday. “But the solutions to these problems will involve a long process.”
Economic mission timeline
Economics Minister Johann Schneider-Ammann led a party of 20 Swiss business delegates to Russia on a four-day mission from July 10 to July 13.
Schneider-Ammann held talks with Russian Deputy Prime Minister Alexander Zhukov and Minister for Industry and Trade Viktor Khristenko on Monday.
The ministerial dialogue centred on the ongoing free trade agreement negotiations, Russia’s bid to join the World Trade Organisation and Swiss representation on the G20 in 2013.
On Tuesday Schneider-Ammann met Russian Minister for Sport, Tourism and Youth Vitaly Mutko to discuss Swiss business participation in Russia’s hosting of the 2014 Winter Olympics and the 2018 football World Cup.
Also on Tuesday Schneider-Ammann asked Russia’s Minister for Economic Development Elvira Nabiullina to support Switzerland’s continued representation on the executive board of the International Monetary Fund.
Swiss Foreign Minister and this year’s President Micheline Calmy-Rey joined Schneider-Ammann on Wednesday to inaugurate a new Holcim plant in Kolomna along with Russian President Dmitri
Schneider-Ammann and Nabiullina signed a joint statement on cooperation between the two countries to assist the modernization of Russia’s economy.end of infobox
Swiss-Russian trade links
Trade between Switzerland and Russia has picked up since the financial crisis.
Exports from Switzerland to Russia jumped 26% last year to SFr2.6 billion ($3.1 billion) while goods and services travelling the other way totalled SFr1 billion (+41%).
Swiss direct investments in Russia reached SFr6.2 billion in 2009, with Swiss firms employing 75,000 people there.end of infobox