US-Russia Economic Ties: Impact of US sanctions

World
Europe

02:24

So how are the latest American sanctions affecting the business environment in Russia? Are investors becoming more hesitant to make decisions in Russia? Our Ming Tian has more from the St. Petersburg International Economic Forum.

Tense relations between Russia and the US have eased for the moment as Russian lawmakers postponed passing a bill making it a crime to comply with Western sanctions on Russia. Yet American investors have felt a change since the sanctions.

CHRIS VAN RIET, CEO RADIUS GROUP "One of the areas that keeping the cost of capital relatively high for our business in Russia and obviously constrained what we could do to grow our business, so from that sample, we absolutely feel the effectiveness of the sanctions."

Chris has been living in Russia for more than 20 years, and he's worried that the uncertainty would hang over the investment mood in the country. Business leaders at the St. Petersburg International Economic Forum business are pushing for a long-term relationship.

MING TIAN ST. PETERSBURG The Russian government has issued a series of initiatives to attract foreign investment. In the far east area, for instance, policy favors include free use of land, infrastructure and utilities, as well as tax rebates. Officials are confident that the variety of business opportunities would secure investment despite external pressure.

LEONID PETUKHOV, CEO FAR EAST INVESTMENT & EXPORT AGENCY "We have an investor from Australia who wants to do agriculture. The guy is from a farming family and brought his family here."

Petukhov said Russia needs to diversify its foreign investment portfolio. Yet investors say American sanctions may stand in the way of that effort. That's because the costs of financing have risen, making it more expensive to do capital intensive industries.

Businessmen on the panel said that the American delegation was the largest at the forum, even though official trade figures between the two countries don't reflect the situation. The panelists argued for a long-time serious relationship between Washington and Moscow. But it's still uncertain how any good gestures would produce deliverable results. Ming Tian MT, CGTN. In St. Petersburg.