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    SPIEF: ‘Overarching Topic for Companies Is the Question of US Sanctions’ – Frank Schauff

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    St. Petersburg International Economic Forum 2019 (41)
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    Frank Schauff, CEO of the Association of European Businesses, told Sputnik about the situation in the Russian economy against the backdrop of sanctions and how European companies are ready to return to cooperation, as well as about the association’s joint activities with the Ministry of Foreign Affairs of the Russian Federation.

    Sputnik: For the past few years we have seen an agenda of protectionism versus globalisation all over the world. We are seeing this in big countries and big players; China and the US are having disputes over protectionism and globalism. Do you think these two trends will coexist, or will something win out?

    Frank Schauff: My assumption is that it is going to continue for some time like this; we see that there are countries which are more in favour of continuing the path of globalisation and cooperation, and others who have changed to a different position. What we’ve seen, generally speaking, certainly is that with regards to the political development, there is a tendency towards nationalisation of politics; you can see that in the US, you can also see that in Russia, you can see that in the European Union as well.

    And this is to a certain degree very interesting because it contradicts in the end mega-trends which have developed in the past few years, only to mention the question of digitalisation. It’s very peculiar that in a situation where globalisation is continuing at a very rapid speed that countries want to find nationalist solutions to deal with these questions, how to regulate everything around digitalisation.

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    Or [if] we look at the question of climate change, which is very hardly discussed in the European Union, in Germany for example, and where, in the end, more global cooperation is needed; we even see countries or governments that are denying that global climate change exists at all.

    Sputnik: Do all these changes in the European Union and more of a nationalist agenda coming into play mean that businesses will suffer to some degree with losing global markets?

    Frank Schauff: Let’s look at the statistics. What we can see is that in the past two or three years, the global growth of the GDP has slowed down; it’s growing, but it’s growing slower. Secondly, international trade has slowed down; it’s also still growing – at around three percent is the projection – but anyway it’s slower than before. And we see it in the highly sensitive area of foreign direct investments; foreign direct investments are very sensitive in regard to political developments.

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    There has been a significant reduction in global foreign direct investments in the past few years, and it doesn’t really seem to [be growing] again. From this point of view, certainly, it plays a role in what is happening in the political arena.

    Sputnik: Your association is playing an important role in establishing diplomacy and diplomatic efforts, and EU-Russia ties are one of the points on its agenda; we saw an event with Russian Foreign Minister Sergei Lavrov giving a speech on the subject in Moscow. How important is it for European businesses to coordinate their efforts with Russian diplomats?

    Putin and Trump at the G20 in Buenos Aires, Argentina.
    © Sputnik / Владимир Астапкович
    Frank Schauff: I wouldn’t call it coordination, because, certainly, we are a different field, we are not diplomats, but certainly for us, it is very important for us to understand what way the political relations between the European Union and Russia are going. As I mentioned before, especially foreign direct investments are very sensitive with regard to political developments, and therefore it’s good to understand if relations between the EU and Russia are improving, becoming worse, or staying the same.

    Secondly, as the Association of European Businesses, we see it as our task amongst others to improve the relationship in economic terms between the EU and Russia and make them more stable. And for this reason, such a discussion as we have had with Mr Lavrov, over a number of years, is very valuable for us.

    Sputnik: You mentioned the vector of these relations between Russia and the EU; in your opinion, are they improving, are they staying at the same level, or are they at a destructive stage right now?

    Frank Schauff: I would say that they are not really good, but they are stable. Certainly, since 2014 we have seen a clear change in the political framework of our activities. But generally speaking, if we talk to the Russian side, if we talk to the European side, it’s very interesting to hear that both sides have an interest in cooperating and also would like to do more.

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    This might be a reflection of the difficulties which are there with the US, especially, because both sides are suffering from the activities of the US government over the past two or three years. And therefore, from our point of view, it would be very advisable to find ways of further improving the cooperation between the EU and Russia.

    Sputnik: When it comes to the domestic situation in the Russian economy, I know that your association is dealing with the subject, at least looking into what’s happening. What ways are there to improve the situation, in your opinion?

    Frank Schauff: It might be interesting that last week we published a survey, which we do every year together with a company called GFK, which is a German market research institute. This survey is very valuable for us because we understand where our member companies see the biggest problems with regard to the Russian market.

    To say it clearly, the overarching topic for the companies is the question of US sanctions at the moment, and everything that is related to it, for example, the question of the exchange rate of the rouble – we saw last year that the rouble reacted immediately to sanctions which were imposed at the end of April 2018; this plays a role for the companies, because the risk has increased significantly.

    If we talk about, let’s say “original Russian problems”, these are things you would expect – the questions of bureaucracy, corruption, the question of the legal framework. And from my point of view, it has been interesting to see that those who are expecting that the bureaucracy is getting better are becoming less and less over years; so, people don’t really expect that the bureaucracy will become better.

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    But on the other hand, I think that the Russian government took a very important initiative, which they call a “regulatory guillotine” - they want to modernise the system of inspections which is in Russia; they want to get rid of unnecessary inspections, make it more rational, more predictable, and in the context of the question of de-bureaucratisation, this makes complete sense.

    The views and opinions expressed by the speaker do not necessarily reflect those of Sputnik.

    The views and opinions expressed in the article do not necessarily reflect those of Sputnik.

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    St. Petersburg International Economic Forum 2019 (41)
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