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Evseev, Gussev. G8 and Russian business: the perspectives

01.01.70

November 2005.

Russias debut of G8 presidency is a challenge for the country and its business community. Using the mechanisms of the G8 Russian business can improve its image abroad and strengthens its positions in the world markets.

But small number of big Russian fuel energy Companies (TNK in Russian) of world level, poorly developed civil institutions the lack of G8 professional experts, narrow interest of the most Russian companies, finally the lack of experience in communication with authorities on the questions of the global economical interests are the main obstacles in involving Russian business in the work of the G8.

Specialization of the national business in the world labor division determines the tendency and the level of its interest in G8 questions consideration.

G8 is one of the most influential and closed political clubs in the world. The considered questions cover a wide range of international problem in economical development, security, ecology, poverty reduction, democracy development and other problems of the present day.

Many of these questions in this or that way touch upon economical interests of the G8 member-countries. Accepting this economical base of G8 negotiations, we inevitably face the question of those who have those interests. The level of business interest in the participation in the G8 policy and its realization depends on the level of its integration into world economy, while the orientation of these interests depends on the countrys specialization in the world labor division.

Obviously, considering Russias main export trends, the key external economy interests would lie in fuel and raw materials market, arms market and in the number of high technologies.

There are two key proprietors in the national economy. Their opinions on the essential questions should coincide to a certain extent. They are government and private sector. Consensus of the government and the business community on the global problems, discussed at the G8 seems to be very important because the success of the national interests realization depends on the non-contradiction of their positions. Obviously, today the fruitful and constructive dialogue would be the priority.

Taking into account the scope of the private capital in the national economy, it is important to attract the business representatives to the formation of the G8 Summit agenda. This will be the pledge of Russias successful participation in the elite political club, especially its presidency.

What is the interest of Russian business in participating in G8?

There is no question that the postulate saying: The goal of any company is getting profit is still valid. But G8 is first of all informal political club, which works at the worlds level. So the mechanism of the G8 work and its frames do not allow lobbying interests of the certain companies and economy sectors, though they can influence their development.

For the specific world trade questions we have WTO, and other alternative grounds, their importance for the business community is almost the same as that of G8 and in this sense they are not a hinder stone for the business community. For instance the Russian business researches made by the Managers Association show that Davos and London Forum are treasured a lot. For the Government the G8 is unquestionable priority.

Meanwhile the expert palls, led by the Managers Association, show that the business community express its desire to take part in the G8 work, either directly or indirectly. And it waits for the governments initiative for the mutual cooperation.

The G8 presidency is primarily the strong image promotion for Russia and its national business. Russian companies have a great opportunity to improve their image abroad and to prove themselves leaders in their sectors. They also can penetrate to the foreign business elites.

Applying the G8 mechanisms Russian companies can strengthen their influence in the countries and regions they interested in, change the trends of their activities and strengthen their reputation.

But to use these advantages Russian business has to have considerable world economic interests.
The volume of Russias export-import deals can hardly be compare to that of other G8 countries. Regional trade structure of Russian export is very limited and the companies that are really interested in the gaining global influence is few in number.

Despite the absence of the direct possibilities to solve economic problems, G8 plays an essential role in the definition of the strategic development priorities, global and regional business market creation. It is hardly possible to overestimate G8s role in these aspect.

Most of the decisions taken by the G8 include indirect economic interests. For instance, the question of the terrorism counteraction create the grounds for the special arms and military equipment. The pharmaceutical companies interest is touched upon by the health questions and infectious disease control. Many of the economy sectors are touched upon by the questions of the global climate change etc.

Russian business is not active in the Russias G8 presidency, despite all the possibilities. What are the reasons for such behavior?


First of all it is the absence of interest in gaining global influence, except for the fuel and raw material sector. Most of the national companies tend to solve their interior problems, concerned with the modernization of its funds, through solution of the financial and HR problems, or just struggle to survive.

World practice shows that the most active players on the world arena are big TNKs. In Russia there are only few the corporations of these kind, which are concentrated in the fuel sector. So it is evident why the subject of the energy security is announced as the prime theme of the agenda. Practically, it only fortifies Russias specialization in the world market labor division.

The G8 agenda itself is seen by Russian companies as something that hardly concerns them and their business, as most of the questions are far from the everyday life and concerns.
The other problem is the ill development of the civil institutions in Russia. So only few of them start to participate in the international discussion on these questions.

The absence of effective mediators, able to represent collective interests of the business community, hinders companies participation as well.

The weakness of the civil society institutions becomes even worse due to the lack of the weak expert potential in the questions discussed by the G8.

The lack of the G8 experts in business and NGOs, as well as their fragmentation do not allow government structures to effectively apply this resource in the Russias presidency framework. That will inevitably effect its work. In fact, today the government cannot rely on the civil society institution and has to deal with the presidency agenda formation all by themselves.

But the situation is conditioned not only by the weakness of the civil society institutions and business community, their poor interest in the G8, but also by the specific activity of the government structures. The topic of the G8 has remained closed up to the recent time. MIF of Russia and Administration of the President were unwilling to contact business community and NGOs. There are still no developed forms of a dialogue between Government, business community and NGOs, which would help to apply available resources of the Civil Society.

Russian companies are not motivated enough to participate in the work of the G8 due to many factors among which the problems mentioned above along with the lack of understanding of the advantages that participation in this political club can bring. Other problems are in the competitors in the form of Davos and London forums, a whole range of specialized local and regional activities and events and, finally, the lack of information.

Russian business and G8 steps toward each other.

The objective difficulties listed above raise the question whether Russian business participation is a necessity in the developing of the policy and realization of Russias obligations in the G8 frames. Our answer is unambiguous yes.
Russias participation in the G8 is a privilege that is available to a limited number of countries. Russia and its business have to learn to use this elite position for promotion of their economic interest along with the political ones. This aim requires a steady work in different directions.

Besides, the decisions taken by Russia within the G8 framework are realized mostly at the expense of Russian companies, paying taxes in the federal budget. Considering that, it is quite logical to raise the question of companies participation in the Russias policy shaping within the G8 frames, which implies taking responsibility along with the government structures.

Russian business consolidation and its involvement into the G8 work will allow to approach G8 to the Russian companies, make its work more comprehensible, that is attractive for the companies. In its turn, the intellectual and resource potential, brought by the Russian business, will raise the influence of this world union and will strengthen Russian position in the negotiations.

It is absolutely evident that strengthening of the national business activities, like shaping and support of its global interests, including the application of the G8 mechanisms, needs time and Russian economy recovery - Russian companies presence in the world markets, commodity diversification in their supplies. Finally, it requires the development of the global social responsibility on the part of Russian business. But it looks more like a long-term perspective.

Considering that, it seems worthy to use the experience of the first Russian presidency to acquire broad expert possibilities and skills of Russian Civil Society and business world, to find the way of their involvement into the discussion on the global level. The other important point lies in the development and application of the ways of Government, social and business structures cooperation, especially during their work at the Russias foreign policy position and further realization of the taken responsibilities. This is where Russia should pay better attention to the experience of the other G8 member-countries.

Evseev V, candidate of the economy science
Gussev A, candidate of the economy science

Expert opinion

Halter Marek

02.12.06

Halter Marek
Le College de France
Olivier Giscard dEstaing

02.12.06

Olivier Giscard dEstaing
COPAM, France
Mika Ohbayashi

02.12.06

Mika Ohbayashi
Institute for Sustainable Energy Poliy
Bill Pace

02.12.06

Bill Pace
World Federalist Movement - Institute for Global Policy
Peter I. Hajnal

01.12.06

Peter I. Hajnal
Toronto University, G8 Research Group