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The Business Climate in Russia and the States of the Former Soviet Union

  • Hon. Alcee L. Hastings
    US












House of Representative

110th Congress, Second Session

Madam Speaker, after the summer recess, the Helsinki Commission, which I chair, was preparing to conduct a hearing on United States and Western businesses at risk entering markets in Russia and the former Soviet Republics without the protections guaranteed by the rule of law and government adherence to market principles. The hearing had to be postponed due to the invasion of Georgia, but it is our intention to take up this issue in the next Congress. 

The Helsinki Commission, and the OSCE, is fully committed to the development of democracy, civil society, the rule of law and free markets in the Russia Federation and in other states of the former Soviet Union. We trust that Russian President Medvedev shares that commitment when he proclaims that “my most important task is to further develop civil and economic freedoms.” 

Yet we see evidence that Russian authorities continue to selectively prosecute and harass human rights advocates, prominent business leaders and journalists by employing arbitrary and extralegal means to achieve state and political ends. This is often accomplished through a manipulated court system, thus denying its citizens and foreign investors the impartial application of the rule of law and equal justice. 

In June, 1992, the United States and Russia negotiated and signed the Bilateral Investment Treaty, which grants investors the protections and safeguards necessary to conduct business in a fair and transparent environment. Unfortunately, Russia has failed to ratify this important measure that would ultimately serve the economic interests of both our nations. 

Along the same lines, it is regrettable that Russia refuses to ratify the Energy Charter Treaty. This measure insures the rights and protections of private and public sector interests against a government taking arbitrary action that would disrupt or threaten global energy security. The thousands of United States investors who became shareholders in the Russian oil company, YUKOS, lost everything when the Russian government seized the company’s assets. 

Finally, Russia has not honored its pledge to amend its federal laws to guarantee protections of intellectual property rights and enforcing such laws consistent with international standards. I would note the frequent Western media reports on cases where Russian authorities have seized the assets of certain companies, many with foreign investors, utilizing executive decrees, court orders, and extradition requests to assume ownership or control over Russian enterprises. Some foreign investors have been compelled to surrender their equity shares in Russian companies without proper due process and compensation only to have Western courts, in a series of cases, issue rulings in favor of such companies. 

Madam Speaker, we appreciate that our economy is truly global and American and Western investments are essential in Russia and throughout Eurasia, given their abundant natural resources, and urge that all countries can mutually commit to an economic relationship that is based on mutual trust, the rule of law and market forces that are free of arbitrary or capricious government activity.

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