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Top Eyes On Russian Graft

When they met in July, Presidents Obama and Medvedev not only dressed alike, they created a Bilateral Presidential Commission. They’ll chair it and Secretary of State Clinton and Foreign Minister Lavrov will act as coordinators. Working groups under the commission’s umbrella will include energy, security, environment, arms control, counter-terrorism, cultural exchanges, and — the reason we’re talking about it — business development. That group will be headed by Secretary of Commerce Gary Locke and Minister of Economic Development Elvira Nabiulline.

The press offices at the White House and Kremlin didn’t provide other details. But Reuters talked to the head of the U.S.-Russia Business Council, a Washington-based group that helps American companies do business in Russia. Edward Verona said he thinks the new presidential commission will increase U.S. – Russia trade, which at $36 billion in 2008 was the same as U.S. trade with Thailand.

“The commission is very important and I don’t think you can do deals without some government involvement and the blessing of both governments,” Verona said. “Corruption, the rule of law and bureaucracy are easier to address through this channel . . . instead of individual companies going to the press and announcing that they may be suspending their investment in the country,” he said.

Russia ranks near the bottom of the World Bank’s Doing Business Index (here). Endless red tape and stories about bureaucratic shakedowns discourage foreign investors.

Earlier this year, for example, Swedish furniture retailer Ikea loudly suspended a store-opening outside Moscow. It acted after local bureaucrats imposed a last-minute requirement that its new building be able to withstand winds nearly twice as strong as the most powerful gusts ever recorded at the store’s location.

Secretary Clinton will travel to Moscow in the fall for the commission’s first coordinator meetings.
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