UK- Russia Business Relations – Get Ready for Change…

Get ready for change byJohn Bonar

As visitors to London’s Science Museum marvel at the Russian Soyuz space capsule that carried Major Tim Peake to the International Space Station ISS two well informed speakers held out prospects for change in UK-Russian trade relations to WRF meetings in Westminster.

Mark Littlewood, the Director General of the Institute of Economic Affairs and Philip Owen, Director of Volga Trader both found appreciative audiences. Mark spoke on April 19th on Free trade vs. Sanctions – opportunities for the UK and Russia post-Brexit’ . Philip spoke a week later on “How to do it – The Practicalities of Trade and Investment in Russia”.

With a UK general election due to elect a government on 8th June Mark predicted a victory for the Conservatives with Theresa May capturing an increased majority. He also predicted an opportunity for change in relations with Russia.

“Sanctions could be dropped. Engagement is to be preferred to a return to the Cold War”, he told the audience in the Morpeth Arms on Millbank across the Thames from MI6 headquarters.

Sanctions, he explained, were not just restricting London’s ability as an international financial centre to deal with Russia but also hurting Northern Ireland cheese exports (Russia used to be their top market).

He cited the possibility of Russian demand for British agricultural products alone being able to meet the bill for BREXIT. “Sounds like a win to me,” he quipped.

Philip, speaking in another Westminster venue, told his audience that sanctions were helping investment into Russia because international manufacturers had realised that produce from a factory in Russia was protected by the state with tariffs on competing products imported from abroad, even if they were not sanctioned. He cited Nestle as an example with eight factories in Russia, one of which produced instant coffee from ground coffee beans while its competitors suffered high customs duty on their imported coffee.

Apart from grains, Philip said import substitution success for pork and poultry were created through a drop in demand.

The biggest attraction for foreign investors in Russia was the significant drop in the rouble, which has lost over 40% of its value against the dollar since 2014, said Philip pointing out that this effective devaluation was more due to the collapsing world oil price than sanctions.

“Credit is expensive in Russia,” Philip said and with the Bank of England keeping British banks lending interest rates at an all-time low there was never a better time for British investors to raise funds to acquire performing assets in Russia, he said.

Volga Technology and Trading Ltd with offices in Saratov Russia and headquartered in Bridgend, Wales offers support for direct investment as well as guidance on market entry, bespoke market research and finding buyers for Russian businesses.