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This is an archived USAID document retained on this web site as a matter of public record.
Address by Don Pressley
to The American Russian Investment Forum
Harvard Club, New York City
November 16, 1999
Well let me start by thanking the American Russian Investment Forum to invite me to speak today. It is a pleasure to be here.
As you all know, Russia has been in the papers quite a lot lately.
Between allegations of corruption, questions of whether Russia is lost - and if so, who lost it - and stories of war and economic collapse, none of the news seems good.
Well, I am here to tell you that USAID does not believe that Russia is lost, and despite all its problems - which no one is trying to deny - there is still cause to be hopeful.
True - it’s not easy to do business in Russia.
Complicated and arbitrary tax codes, complex and confusing laws and regulations, the lack of basic business management skills, and inadequate access to finance are all significant obstacles - as you well know.
If the goal of development work is sustainable growth - and it certainly is - then development agencies like USAID must do all they can to oil the engine of that growth: which we think is small and medium businesses.
For ten years now, as long as we’ve had programs in Europe and Eurasia, that is exactly what we have done.
Economic reform has been the centerpiece of our efforts in this region - and Russia is no exception.
But the largest dot on our radar screen these days is corruption. You can’t talk about business in Russia these days without also talking about corruption, so let me touch a little bit on our anti-corruption efforts.
In Washington, more and more people are beginning to realize that corruption is not just a nuisance that you have to live with in this part of the world, but a real obstacle. It sours honest business men and women on the Russian market, robbing everyday people of thousands of jobs and opportunities.
USAID is combating this disease by working to make business practices transparent. Foreign investors must know where their money is going: for Russian businesses, this means publishing audited numbers, notifying stockholders of major changes in management or business structure - and it means that the decision makers at Russian firms must be held accountable for their actions - not just to stockholders, but to the law.
USAID is working to decrease the number of business regulations and licensing requirements, which create opportunities for corrupt officials.
We are working with the media and NGOs to develop their capacity to be the watchdog of the public good. As we see here in America every day, a truly independent media trained in investigative techniques is one of the best antidotes to corruption.
We are working to help the judiciary become less susceptible to threats and bribes.
And finally, we are working to introduce ethics codes into business and legal associations.
That’s what we’re doing. But we can’t do it all - we need help from people like you: businessmen and women, investors, entrepreneurs who are unwilling to compromise their beliefs and high standards.
Corruption can be eliminated by reform, yes, but also by people like you refusing to pay bribes, or fees, or any other sort of payment to conduct normal operations. Only then will corruption become less profitable, and hopefully, less prevalent. But this can only happen if international firms present a united front - unfortunately, the problem is just too big for one or two businesses, working alone, to have any lasting effect.
I believe deeply in the good American business can accomplish in developing countries. Our high standards - material as well as ethical - are the envy of the world.
You know, I constantly hear that it is American business and American investment that the peoples of not just Russia, but Georgia, Macedonia, Bulgaria want. Why? Well, one the main reasons is our reputation for honesty and fairness. Ultimately, the business men and women of Europe and Eurasia are like business men and women everywhere - they will do business with whoever offers the best deal. But still, they know that by and large American firms will treat them right - and that’s good business for everyone.
As anyone working in this region knows, corruption is an insidious problem - and one of the main impediments to development. So I encourage you - I challenge you - to take a hard line against it.
Tell Russian officials that you won’t invest in their city, region, or country unless you are allowed to conduct business honestly. Make your demands clear, and make them publicly - everyday Russians need and deserve to know that why they lose millions upon millions of dollars in investment every year.
I just came home last week from Tbilisi, Georgia, where every member of the International Chamber of Commerce has taken a public pledge to not offer bribes to government officials.
This pledge was highlighted on TV, covered in the newspapers, and recognized by the legal community. It was really quite an event - and it’s just one example of how the business community can combat corruption.
Similarly, in Russia, you can let the Russian people know that unless their government cleans up its act, you will take your business elsewhere.
We clearly have a lot of work to do.
But, though the papers don’t report it often enough, I think we are making progress in Russia. We do hear good news every once in a while.
We hear it from places like the city of Vladamir, four hours northeast of Moscow, where, as a result of a USAID-funded business registration streamlining project, the number of new business has doubled this year - from the average of 700 per year to fourteen hundred.
We hear it from places like Samara, where Governor Konstantin Titov says that the state’s role in the economy should be like that of a referee on a soccer field - doling out yellow and red cards to those who break the rules but trying not to interfere with the free flow of play.
And, partly because of this attitude, Samara has done really well compared to the rest of Russia: long-term investors - like Nestle - are opening up shop, Russian firms - like the Siberian Aluminum Group - are moving their headquarters here, and even local firms like the Zhigulyevskoe Beer plant are doing well. By the end of this year, Samara’s gross domestic product is expected to rebound to the level of July 1998, the month before the crash.
And there are other stories like this from all across Russia - stories of an individual or group of people having a real impact on the business climate of their community.
It is now up to people like you and organizations like ours to find these people, and help them succeed.
It will take a lot of hard work and patience on our part, but I’m sure we can do it.
Again, thanks for having me here today.
This is an archived USAID document retained on this web site as a matter of public record.
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Last Updated on: July 12, 2001 |
