The year 1997 retained, on the whole, a trend for Russian exports shrinking against imports, which appeared within a few previous years due to rising imports from outside the CIS and plummeting prices of Russian fuel, long established as its dominating export item.
Russia's top five trade partners in 1997 were ranking as follows: Germany (close on 12% of Russian imports), Belarus, Ukraine, the USA and Kazakhstan. France came 8th with 2.9%, immediately after Italy and Finland, as against 1996, when it had the 9th position.
France was doing ever better in Russia's foreign trade throughout 1997 with notably growing exports to Russia.According to French statistics, they came 44.3% up within the year to reach 17.8 billion francs, as against 10.2 billion the year before.Russian exports to France, on the contrary, shrank by 1.7% to 20.3 billion francs against 20.7 billion in 1996. A mere twelve months thus halved Russia's positive balance in bilateral trade to 5.5 billion francs against 10.4.
If the same indices are evaluated in US dollars, i.e. with an account for changing currency rates, French exports to Russia grew by a mere 27% in 1997. Nevertheless, the situation in bilateral trade graphically confirms an overall trend for extending Russian imports from countries outside the post-Soviet area. In this, French exporters are ever more active on the Russian market. Their supplies were growing by an annual 15% to 20% since 1994.
Imports of French-manufactured electric household appliances were growing the fastest throughout 1997, by 669 million francs, to a total exceeding 1.8 billion francs--12.4% of overall French exports to Russia. France roughly accounts for a half of the entire amount of these commodities in the Russian domestic market. Perfume and cosmetics were ranking second, 8.3% of the entire French exports, to 1.2 billion francs, though the rise was slower here. Imports of medicines (to 436 million francs), information technologies (397 million francs) and fresh meat (300 million francs) also saw a major increase.
Fresh meat, poultry and game included, ranked third to account for 7.3% of the whole to 1.1 billion francs, with a 10.3% rise.
Russian exports to France fell mainly due to a 4.8% shrinkage of petroleum product supplies. On the whole, the structure of Russian exports saw no major change within 1997 to retain fuel and raw material domination. Natural gas accounted for 30% (6.2 billion francs), crude oil another 30% (6.1), and petroleum products 11.6% (2.4). Russian metal exports skyrocketed to 3.48 billion francs against 2.9 in 1996.
Active in Moscow and St. Petersburg - alongside Kiev, Alma Ata and Baku--are economic development offices under the French Embassy economic department. These agencies render assistance to French-based industrial companies operating on the Russian market or willing to appear on it, and supply them with comprehensive information about Russian economic developments, and effective laws and regulations. They also arrange and help to run French shows, seminars and colloquiums, and implement target programmes for Russian personnel training in French managerial knowhow oriented on a market economy. These agencies are, as a rule, extremely efficient with top-notch experts on their staff, who have extensive contacts in French business and Russian organisations related to foreign trade.
According to the Moscow economic development office statistics, a total 376 enterprises with all or a share of French capital were active in Russia by the end of 1997 (306 in Moscow, 63 St. Petersburg, and another seven in other major regional centres). French exporters were quicker than the others to take stock of Russian consumption trends and switched emphasis to consumer goods intended for the middle class in terms of prices and quality at the expense of luxury items for a select few. The French commerce has better chance than others in the Russian market also due to long-established public preferences for France. Thus, according to opinion polls, France outruns the USA, Italy, Greece and Germany as tentative tourists' and holiday-makers' attraction. Likewise, Russian customers like articles labelled, Made in France, better that any others.
Cosmetics, perfume, consumer electronics, medicines and other consumer goods account for almost a half of French exports, in terms of prices. Foodstuffs and other farm produce makes roughly 25%, while industrial equipment a mere 15%, followed by transport vehicles, chemicals and timber articles.
Russian exports to France are notable for raw material domination. Fuel accounts for over 80%, though the French market offers no prospects to increase sales. Shrinkages are reported from the markets of Russian foodstuffs and other farm produce, chemicals, transport vehicles and industrial equipment. Thus, Russian exports have reached their ceiling and stay unchanged at or even decline.
Regulating Franco-Russian trade and other economic contacts are intergovernmental agreements on cooperation in implementation of economic regulation methods of 6 February 1992; economic, research and technological cooperation in the agro-industrial complex of 30 July 1992; debt consolidation of 12 October 1993; debt rescheduling of 22 September 1997; fuel and power industrial cooperation of 15 February 1996; and cooperation for safe destruction of Russian nuclear arsenals and civil use of obtained nuclear materials of 12 November 1992; a protocol of accord on petroleum sector financing of 15 February, 1996, and interdepartmental understandings in trade and other economic fields.
Of major importance is a convention to avoid double taxation and prevent income and property tax evasion of 26 November 1996.
Exemplifying fruitful teamwork are the activities of the French Lafarge company, one of the world's leading construction material manufacturers. The company acquired practically complete ownership of the Voskresensk cement combine in 1996, and has since invested several tens of million francs in its updating. The Lafarge is currently one of the most dynamic of French direct investors in Russia. As for the agro-industrial complex, Louis Dreyfus is joining hands with the World Bank, the EBRD and other international agencies to finance a Russian-French farming enterprise growing grain, sugar beet and sunflower in the black-earth Voronezh Region. The initial area under crops of 20,000 hectares will extend to 100,000 if the venture proves a success. The Renault intends to increase the number of its Russian corporate dealers to twenty and get over a hundred by the year 2002. The Sonepar electric equipment exporters are planning to expandits transactions with Russia from a current 70 million francs to 500 million in 2002.
Banking investment had been steadily growing before the Russian financial crisis of August 1998. The Credit Lyonnais, Societe Generale and BNP, whose Russian-based affiliates are among the top fifty in Russia in terms of net assets, ventured on Russian economic loans. The Credit Lyonnais came out among the leading managers of an US billion indexed bank loan to the Gazprom. The Societe Generale joined a few other banks for a US million loan to the Moscow municipal administration. The Credit Agricole Indosuez and its several partners made a similar loan to the St. Petersburg administration. The BNP and several other banks provided a US million revolving credit to the Vnesheconombank for financing export/import operations. All those credits have certain terms far more favourable than generally accepted on the current market.
The Grand Commission. The Russian-French summit of January 1996 in Paris determined to establish a commission for the issues of bilateral contacts at a prime-ministerial level.
Its establishment was legally formalised by a joint statement on the commission establishment of 15 February 1996. The commission had its maiden session within the month. According to the statement, the commission is a leading agency to determine strategies and channels of stepped-up contacts in trade, the economy, research, technology, culture, the social sphere and other fields of cooperation. It is to promote Russian and French business and specific projects.
The commission sits in session twice a year in France and Russia, alternately, and performs in close interaction with other bilateral cooperation agencies.
Its second session gathered in Paris on 26 November 1996; a third in Moscow, 31 October 1997, on an official visit of Prime Minister Lionel Jospin. Summing up the session were a final document; an agreement on mutual administrative assistance in the prevention, investigation and interruption of customs rule abuses; a memorandum on space-related cooperation; a memorandum on a pharmacological inspection laboratory to be established in Russia with French equipment and knowhow; framework agreements between Russia's Vneshtorgbank and several major French banks; and several commercial contracts and protocols.
Prime Ministers Lionel Jospin and Sergei Kirienko co-presided a fourth session in Paris, 4 June 1998.
The Parties highly evaluated the entrance into force, 1 December 1997, of a Russia-EU partnership and cooperation agreement and stressed the importance of easier reciprocal market access with a steady and transparent legal basis.
The Prime Ministers instructed Georgi Gabunia, Russia's Minister of Trade and Industry, Denis Strauss-Kahn, Minister of the Economy, Finances and Industry of France, and Georges Donde, France's Secretary of State for Foreign Trade, to consider practical implementation of the Russia-EU partnerly cooperation agreement--in particular, concerning anti-dumping measures--and report their efforts to the next commission session.
As the Parties agreed, Russia's joining the WTO is another step of its incorporation in the global economy. France once more voiced support for that process and pointed out with satisfaction Russia's tariff proposals. France insists on these proposals streamlined and enlarged with service offers, investment terms and patterns of intellectual property and customs regulations to step up negotiations with the WTO.
The Parties vouched support for joint OECD-Russia efforts on the contact committee to prepare the ground for Russian membership of the organisation.
The Prime Ministers approved the achievements of the council for economic, financial, industrial and commercial issues--the basic agency of the commission, which had its 6th session on 3 June 1998. They took into consideration the achievements of a bilateral agro-industrial committee, which had a 2nd session the same day.
The trade turnover can be expected to grow within the next few years--primarily through extended trade in high-tech industrial produce, in particular, concerning aerospace, telecommunication, automotive and certain other industries, Russian delegates pointed out.
The commission considered medium-term prospects of bilateral economic cooperation in the following fields:
In the context of Russia's joining the WTO, the Prime Ministers pointed out that legal provisions in of both countries concerning products named after their provenance, such as cognac, champagne, vodka, etc., provide a promising field of bilateral contacts, which envisage adapted patterns of certification, registration and labeling so as to take into consideration guarantees earlier offered by government supervisory bodies which check these articles, provided that the principle of truthful consumer information is strictly observed.
The state visit. Sergei Kirienko was facing tough negotiations as he came to Paris in summer 1998. However, judging by initial evaluations of their fruit by Russian and French analysts, problems on the agenda were solved smoother than expected. His visit lasted a mere 30 hours--not enough to settle all issues, but concerted efforts helped to find a route for further progress, said Prime Minister Kirienko. Lionel Jospin was also satisfied with the talks. According to informed sources, he was paying the utmost attention to his Russian counterpart's desires and insistent demands, and agreed with him on many points--suffice it to mention prospects for discrimination against Russia in aircraft building, crediting policy issues, and abolition of French import limits of many Russian-manufactured commodities.
France today has a Left cabinet, which does not engage in beautiful phrase-mongering as it conducts a more practical and well-wishing policy towards Russia than the previous several Right Centre governments. At any rate, the present cabinet has not taken any discrimination steps against Russia, as was often the case before. Differences of opinions on the European Union HQ in Brussels limit France's chances to promote Russian integration in the global economy. That was why Prime Minister Jospin could not give a straightforward reply to Sergei Kirienko's principal request, for France to help with recognition of Russia as a market-economy country--a status which will remove obstacles from its trade with the EU which are robbing Russia of an annual US million.
Getting back to joint practical programmes and projects, we must point out that the Parties were not intending to crown an intergovernmental commission session with signing a package of sensational agreements. They were discussing routine matters, and brought their settlement closer in aerospace, power and automotive industries, and the agro-industrial complex. Aerospace industry is of special importance to Russia: even if only a part of projects is implemented for joint plane and helicopter production, Russia will immediately increase its exports to France by a billion dollars with high-tech supplies, which currently account for a mere 2% of Russian exports.
The intergovernmental commission made a stride to the implementation of its blueprints as Alcatel signed a contract with several Russian space concerns to supply retransmitters for three Express A communication satellites, which will spectacularly promote Russia's space-based communications. There are ambitious prospects for Russia's Soyuz spaceships launched from Kourou in French Guiana through a joint venture with equal shares.
A US million contract was signed at the same session with the Rhone Poulenc for an expansion and updating of a veterinary vaccine factory in Schelkovo near Moscow. Other contracts and understandings, to negotiate which two regional governors and several dozen top-notch industrial managers had come to Paris with the Prime Minister, are still to be signed.
No sizeable progress was made on quotaless exports of Russian enriched nuclear fuel to France. If this understanding is eventually made, it would graphically improve the present-day unfavourable structure of Russian exports. The lower prices of this fuel make the French fear that their own similar products will become less competitive.
The Grand Council. The sixth session of the Russian-French council for economic, financial, industrial and commercial issues gathered in Paris on June 1998, Mr. Gabunia and Mr. Strauss-Kahn presiding. It preceded a forth session of the Russian-French prime-ministerial commission for bilateral cooperation, whose basic working agency the council is.
The council was satisfied to see the EU Council adopt, on 27 April 27 1998, new Regulations, which envisaged Russia stricken out of a list of countries with government-run trade with respect to anti-dumping control.
The council pointed out a dynamic progress of mutual trade, which reflected a reciprocal goodwill to extend economic cooperation and the Russian economy's openness to foreign contacts. It expressed satisfaction with a major French lifestyle show, which Moscow was hosting in October 1998.
French delegates spoke up for an end to proceedings necessary to finalise mutually approved projects in a 1.5 billion franc credit line of 1996. They confirmed their country's intention to offer COFACE guarantees on sovereignly guaranteed projects according to an established procedure after the line is fullyused. France is willing to address on a regular basis the issues of Russian banking guarantees recognised by COFACE.
The council highlighted available possibilities to step up investment cooperation. As it pointed out, a session of the respective ad hoc team in March 1998 defined a number of channels along which France may increase direct investment in Russia. As both sides agreed, efforts must go on to provide for Russia steady, streamlined and transparent investment patterns, in particular, in finance and the customs. A new Tax Code will be of much help in this respect.
As petroleum industrial contacts were under discussion, the French delegates requested competent Russian agencies to make arrangements for an agreement with Total to enter into force soon, concerning the Kharyaganskoye oilfield, in particular to circulate respective regulations and promote long-term oil-piping contracts with Transneft. These measures are necessary for investments approaching 6 billion francs, which the Total earmarked for the exploration and development of the oilfield.
As cooperated space efforts were discussed, the council pointed out a success of a Russian-French consortium of the Prikladnaya Mechanica research-and-production amalgamation, the Aerospatiale and the Alcatel Espace in a tender to update Russian geostationary communication satellites, which was jointly held by the Russian Space Agency and the State Communications Committee. A preliminary contract was signed in Moscow on 30 April 1998, within the framework of this cooperation to launch three satellites.
The council was satisfied to remark that the Starsem joint venture was to start planned launchings of Globalstar satellites before the end of 1998.
The council spoke for the concerned companies' efforts stepped up to implement in practice satellite-related projects and use the Russian system Glonass.
As concerns aviation industry, the council approved the available cooperation of Russian and French industrial companies on the MIG-AT programme. France confirmed determination to finance the Snecma and Sextant Avionique companies' contracts.
The council highlighted its interest in closer industrial and commercial contacts in aviation industry--in particular, R&D on jumbo jets--a military cargo aircraft on the AN 70 basis, and the Russian-assisted liner AZHH. The council pointed out French interest in closer contacts for MI-38 helicopter R&D with the joint venture Euromil.
The council referred with approval to current or blueprinted projects to update Russian air traffic control with Thomson Coompany participation.
The council mentioned a fruitful opinion exchange by an ad hoc team for construction and housing on building standards, communal economy, and the improvement and updating of the Russian housing. The council pointed out successful construction of a major water-treatment station in the Moscow Region under a project assisted by Degremont and backed by the EBRD.
With information technologies, the council highlighted a promising project for their introduction in Russian taxation services with Bull Co. participation and French financial aid, and related projects involving the Syseca, Gemplus, Bull, and other French companies. In this connection, Russian delegates announced a major reshuffle in Russian agencies responsible for communications and information technologies.
The council expressed satisfaction with fruitful cooperation on the many ad hoc teams of the agro-industrial committee, and spoke in favour of essential projects in animal breeding, sugar production, efforts to increase wheat, sugar beet and sunflower harvests, in viniculture and farm produce processing.
In health services, the council approved the establishment of a pharmacological quality control laboratory, and contacts between the two related ministries. Their objective is to promote specialised projects, e.g., through seminars and hospital fraternising.
As the Parties agreed, a number of issues set out in a supplement to the final document wouldbe regarded by respective agencies later on. The Parties agreed to gather for their next session in Moscow.
The Parties agreed to have the following issues later addressed by relevant organisations. Russia demanded an early revision and abolition of all previous anti-dumping measures concerning Russian-manufactured commodities. Russia regards these measures as discriminatory. In particular, it demands practice-oriented amendments to the respective EU legislation, i.e., its elimination from a list of countries on the CEU 519-94 regulations, and proliferation of its status of a market-economy country to all aspects of its contacts with the European Union. Thus, Russia insists on an end to a seamless pipe anti-dumping procedure on the basis of principles valid for market-economy countries, and revision of prohibitive anti-dumping measures towards potassium chloride. France, in its turn, stressed EU anti-dumping regulations were in full keeping with WTO standards, and its determination to work for these standards complied with in a non-discriminatory and transparent situation.
EU expansion leaves Russia to face deteriorating conditions of trade with its new members, stressed the Russian delegates. This primarily concerns anti-dumping procedures, quantitative limitations and customs duties. As French delegates pointed out in reply, the EU standards comply with WTO standards, and when Russia joins the organisation, it will be able to implement a mechanism stipulated in Clause XXIV-6 of the GATT. The Russian side approved its newly-achieved textile trade understandings with the EU, which envisage the signatories eliminating all quantitative limitations in that field and simplified certification procedures for EU textile and garment exporters.
Referring to a framework agreement for financing petroleum projects to 2.5 billion francs, French delegates spoke for an early implementation of projects to expand the Novorossiisk oil terminal and the Novoufimsky oil refinery with respective participation of the Bouygues Offshore and Technip. Russia proposed to France to consider the opportunities to finance projects in other power industrial sectors out of that credit line.
The French side spoke for an early implementation of a contract with the Thomson Company for 90 frequency monitoring stations to be used by mobile telephone operators on a 1.5 billion franc credit line, and a precious metal recuperation project by the Amethyst, an enterprise of the Russian military-industrial complex, assisted by the Valme company and the EBRD. France also confirmed its interest in the Krasnoyarsk aluminium plant to be updated by the Pechiney.
Russia demanded the MIG-AT aircraft to be certified in France as soon as possible next to be promoted on the world market.
Debts. A Franco-Russian intergovernmental agreement on final settlement of reciprocal financial and property demands, which appeared before 9 May 1945, was signed in Paris on 27 May 1997, as a follow-up on a memorandum of 26 November 1996, for mutual understanding on the issue. The agreement envisages Russia paying to France US million and both signatories giving up financial and property claims on their own behalf, or on corporate and private behalf, which arose before May 1945.
Bill No. 97-1160, passed by the National Assembly on 19 December 1997, approves the agreement and the memorandum. Article 43 on the registration of persons qualifying for the agreement of 27 May 1996 of the law on economic and financial situations, submitted to the National Assembly on 2 April 1998, came as a next stage of implementing premises which follow from respective Russian-French understandings.
Clause 1 of the agreement establishes the following criteria for French nationals to qualify on that category:
An explanatory note supplemented to the bill points out that it is hard to precisely evaluate the overall number of persons who may advance claims to have bonds in their possession reimbursed. It is roughly evaluated as between 200 and 400 thousand tentative holders of two to four million shares. Thus, a census of all tentative claimants is necessarily to precede payments.
Article 43 stipulates the registration procedure for such persons, which concerns:
With consideration for a US million overall compensation ceiling, a resolution was made to limit the census to six months, following which no claims will be accepted.
Following the census, compensations will be evaluated depending on the type of shares and the character of the lost property by a supervisory commission headed by J.-C. Peille, Full and Extraordinary Counsellor of State. The National Assembly and the Senate will each have one representative on it, and their deputies to be appointed by speakers of the respective parliamentary houses. Also on the commission will be members of the State Council, the magistracy, the General Financial Inspection, and two experts on the historical periods involved. Depending on commission conclusions after the census, the French government will make decisions on practical compensation to interested persons. Actual payments are intended to start in 1999.
As the bill was debated, parliament voted down amendments aiming to prolong the census term for another 6 months to trace genuine shareholders and eliminate collectors and profiteers.
As the explanatory note stresses, Russia is strictly conforming with the time limits of payments, as envisaged by the agreement, which are transferred to Account No. 902-31, opened in compliance with item 61 of the 1998 budget (Law No. 97-1269 of 30 December 1997). Receipts on the account after three half-yearly Russian payments, US million each, amounted to 910.9 million francs, including interest, as of the end of February 1998.
According to Russia's State Statistics Committee, as of 1 January 1998, the total accumulated French investment in the Russian economy amounted to US million, or 1.87% of the total investments accumulated in Russia, against the USA's US billion, 28.6%; the U.K.'s US billion, Germany's US billion and Italy's US billion.
In this respect, France ranks 9th among countries investing in the Russian market, and 5th in the G-7.
On 1 April 1998, Russia's State Register included roughly 300 Russian-French ventures--35% of these with 100% French capital. Joint ventures operate primarily in trade and agency services, consulting, information, financial and other services to Russian and foreign partners. Many major French-based companies are stepping up cooperation in oil and gas drilling, processing and transportation, iron-and-steel and non-ferrous metal, chemical, pharmacological and food industries, aerospace technologies, communication systems updating, manufacture of timber articles, etc.
Metal. Multilateral understandings involving Russia and envisaging stability in the world aluminium market stipulate assistance to Russia as it updates its aluminium industry. Aluminium Pechiney embarked on preparing projects, including their financing, to update the Krasnoyarsk aluminium plant, the Samara Metal Company, and enterprises taking part in the formation of the Siberian Aluminium financial-industrial group.
Timber. The French Ceribo and a consortium of seven banks take part in project implementation for an European Furniture Company to be based on a Russian furniture works in Balakovo, Saratov Region. Furniture exports will account for a half of all furniture manufactured in Russia, and total investment is estimated at 150 million ECU. A number of French-based banks are involved in financing the joint venture. Foreign partners have for now invested close on 70 million ECU--roughly 70% of the overall sum--which was used to purchase a complete set of highly effective state of the art equipment.
The first stage of the factory was commissioned in March 1998, and available investments approach US million.
Investment projects in Russia. A fund to promote investment projects was established in Rostov-on-Don with EBRD participation. France's share in it may amount up to 120 million francs.
The advisory council for foreigninvestment in Russia had its 9th session on 16 March 1998. Attending were the Rhone Poulenc and the Renault.
An intergovernmental agreement between the USSR and France on the promotion and mutual protection of capital investment, signed on 4 July 1989, entered into force on 29 May 1991, to grant French investors a sufficient amount of guarantees necessary for investment in Russia.
The USSR and France concluded a double taxation agreement on 4 October 1985.
Credits. In 1992, the French government passed a resolution to establish a guarantee limit of export credits granted by French banks to the Russian government to a total 1.5 billion francs. The limit has been used to the full. Machinery and industrial equipment supplies to Russia on the 1992 credit line amounted to 1.1 billion francs, as of 1 May 1998.
As Prime Minister Alain Juppe of France was paying an official visit to Russia in 1996, a joint protocol of accord was signed for a French governmental credit of 1.5 billion francs to finance supplies of French commodities and services to Russia. Within the limits of that protocol, the Vnesheconombank and a French banking consortium signed, November 1996, an interbank credit agreement, under which France received a payment guarantee from the Russian government and a legal statement on the guarantee from Russia's Ministry of Justice.
As of 1 May 1998, Russia's government decided to finance Russian-based organisations' projects out of the French credit line in the amount of 3,158 million francs. They concern aircraft-making, automotive industry, construction, health services, urban infrastructures, research, and other fields.
Interbank credit agreements of 1992 and 1996, signed by the Vnesheconombank and the French consortium, envisage advance payments of 5% of commercial contract cost before credit spendings start, and another 10% proportionately to actual supplies within periods set by contracts financed out of the French credit line. At the same time, France notified Vnesheconombank late in 1997 of necessary payments of 10% of contract cost by opening an irrevocable letter of credit by a first-class Russian commercial bank, which not merely trespasses the available understandings fixed in the interbank credit agreement of 1996 but threatens to badly undermine Russian industrial financial situation and complicate the use of the credit.
As France's Prime Minister was visiting Moscow in 1996, an intergovernmental protocol of mutual understanding was also signed concerning the financing of joint projects in the petroleum sector with Russian governmental letters of comfort and without governmental payment guarantees.
Debt rescheduling. A Russian-French intergovernmental agreement was signed in 1997 in conformity with the terms of a multilateral memorandum of 29 April 1996, between the Russian government and the Paris Club. This agreement concerned an all-round rescheduling of the former USSR's foreign debt. The document included a debt to be repaid between 1 January 1996 and 31 March 1999, and previously deferred payments under 1993, 1994 and 1995 agreements. The total sum will be paid within 25 years, including the six years of a privileged period during which Russia is to pay only deferment interest.
Financial liabilities of the former USSR to French banks were rescheduled within an agreement with the London Club. A package on settling the deal with the London Club was signed in London, December 2, 1997.
The former USSR's commercial debt will be rescheduled by transference into VEB promissory notes on terms comparable to the Paris and London Club agreements. Debt verification is now in its final stage.
Thus, as intergovernmental documents are signed to reschedule commercial debt, the problem of Soviet foreign debts will be finally removed from the agenda of Russian-French relations to notably promote bilateral economic contacts.
In conformity with the Russian-French intergovernmental agreement of 25 May 1997, on final settlement of mutual financial and property claims arising before 9 May 1945, Russia is to pay to France US million within four years, starting 1997, in eight tranches US million each. The payments are being made in strict conformity with the agreement terms.
Though the available all-round rescheduling understanding essentially eases the burden of Russia's foreign debt payments and allows to save major sums to settle other financial problems, Russia intends to discuss with France prospects for the latter recurring to non-conventional patterns of Soviet debt payment, e.g., high-tech supplies or space research services. If implemented, this arrangement will drastically cut federal expenditures on foreign debt servicing.
As to Russia's more recent debt to France, its servicing complies with an original schedule.
Petroleum. The Total, Gaz de France, CRA Petroleum, Bouygues, Elf-Aquitaine, Technip and other French companiestake part in investment contacts with Russia for oil and gas drilling.
French companies cooperate with Russian companies in exploration and development of oil- and gasfields, and maintenance and rehabilitation of abandoned wells. The Total, for one, was one of the first overseas corporate oil-drillers to sign a production sharing agreement. A contract was signed with it in December 1995 to develop the Kharyaginskoye oilfield in the Nenets autonomous area for a term of 33 years.
The company joined hands with Tatneft Co. for the joint venture Tatoilpetro based on the Romashkinskoye and Novo-Elkhovskoye oilfields. The venture drilled over 400,000 tons of oil in 1997 alone.
The Total is planning participation in the development of the Shtockmanskoye gas condensate deposit 650 km away from the Barents Sea coast. Taking part in the project are Russia's Gazprom and Rosshelf, the Conoco of the USA, Norsk Hydro, Norway, and Neste, Finland. A set of seismic exploration works has been done on the project, and six test wells drilled. Investments are expected to reach an overall US billion.
Feasibility studies are underway on the Usinsk project in cooperation with the French CRA Petroleum (the Paribas group and the Englishman) and Komineft Co. It envisages development of a model oilfield and the protection zone of the Kolva river on the Parmo-Carbon deposit of the Usinsk oilfield. Investments are expected to reach US million. The development agreement has a term of 20 years, and yields are forecast at an annual 30 million tons.
Investment contacts of the Gaz de France and the Gazprom are extending on a number of ambitious contracts for natural gas supplies to France. Several joint ventures have been established for pipeline catode protection and enhancing the effectivity of gas consumed by Russian industrial enterprises (Echo Gaz). The Gaz de France also established several joint ventures with Moscow-based gas-distributing companies and to update gas pipelines in St. Petersburg.
A 2.5 billion franc French oil loan allows to finance several projects being blueprinted in Russia. The French side is guaranteeing them, and loan spending was suspended only due to the absence of necessary Russian decisions.
The agro-industrial complex. Here, Russian-French cooperation is guided by an intergovernmental agreement for economic, research and technological agro-industrial cooperation, signed on 30 July 1992, and protocols and specific programmes with particular French companies.
A Russian-French agro-industrial committee held its firstsession in Moscow, September 1997, co-chaired by Victor Khlystun, former Deputy Prime Minister of Russia, and Le Pensin, France's Minister of Agriculture, Fishing and Foodstuffs.
An ad hoc team of the committee for market access and commercial issues met in session in Moscow on 8 March 1998, co-chaired by A.A. Korolev, in charge of the food market department of Russia's Ministry of Agriculture and Food Industry, and L.-A. Cresse, minister-counsellor for economic and commercial affairs of the French Embassy to Russia.
The Parties discussed the following:
Biological preparations. It was recommended to the Ministry of Agriculture and Food Industry to apply to the federal government for the Schelkovo biological combine to appear on the French credit line in an updating effort roughly evaluated at 300 million francs.
The ministry instructed the amalgamation Selkhozpromexport to sign a US million contract with Rhone Merrieux following feasibility studies financed under the TACIS programme.
Schelkovo updating is one of crucial projects envisaged on bilateral agricultural cooperation.
The Meriale is willing to work on Russian orders for poultry vaccines. Russian authorities are not to proceed from protectionist principles which make them suspend an authorisation, pointed out the French partners.
Babyfood. A contract was signed with the ACP Equipment on Russian Government Resolution No. 1276-p of 12 August 1994, for technological supplies to update the Azov babyfood combine.
French companies are willing to consider updating projects for other babyfood factories, in particular, based in Novosibirsk and Kurgan.
Food industry. The Danone, one of the world's top foodstuff manufacturers, launched a programme in 1992 to attract ambitious investment to Russia.
The company established four joint dairy and confectionery ventures--the MosDanone, investment 60 million francs; the Danone-Volga, 70 million; the Danone-Russia, to be commissioned in 2001, investment estimated at 160 million francs; and the Bolshevik, 50 million francs.
The updating of the Moscow-based Bolshevik confectionery company and launching new pastries in it is among the Danone's major Russian projects. To be commissioned in 2002, the effort demands 340 million francs invested. The Danone holds 67% of the Bolshevikshares, and the EBRD 19%.
Fish and fish products. The fishing department of the Russian Ministry of Agriculture and Food Industry calls attention to discrimination against Russian fish products in France by means of tariffs and sanitary inspection.
Canned fish exports to France are plummeting after the EU Commission dramatically raised standards for Russian fish products exported to EU countries in 1995.
Russian fish products now reach the EU market in close compliance with CEU directive No. 97/102/EU of 16 January 1997. Nevertheless, French sanitary inspectors occasionally reject Russian exports while similar items smoothly reach other EU countries. Russian corporate manufacturers of EU-oriented fish products go trough CEU registration under a compulsory arrangement.
Meat and poultry. France enthusiastically met a Russian federal resolution of 3 March 1998, allowing imports of poultry with giblets. Minced and stripped poultry meat was qualified as semi-finished products for industrial procession.
France pointed out delays with customs clearing concerning poultry meat containers. Things are especially bad with batches going via St. Petersburg.
It also stressed a current difference of customs duties for Brazilian and European poultry exports: 0.225 and 0.3 ECU/kg, respectively, which amounts to a 25% discount. To this, Russia referred to its national preference arrangements, adding that the discount which developing countries were enjoying had been recently halved from an initial 50%.
Animal selection. An ad hoc team discussed Russian prospects to import pedigree animals and so revive meat and dairy industries.
Interlim company supplied, late in 1997, an initial herd of 82 Limousin cattle for the Kurgan Region's farms. These imports may continue under an agreement being drafted to start contacts between Russian cattle-breeders and banking amalgamations.
Negotiations are underway between French bankers and Russia's SBS Agro Bank to improve cattle in the Tver Region on Corale's initiative. Feasibility studies on the project were financed by the French government.
The Russian side stressed the achievements of its financial-industrial group, Agro 2005, which united banks, farms and food industries of the Kurgan, Kaluga and Tyumen regions, and the Republic ofTatarstan.
The group intends to set up across Russia cattle-breeding centres relying on Limousin and Charolais cows imported in cooperation with the French-based Corale, Interlim and Jeune Diffusion.
The Russian side requested the French founding and other corporate partners to help with attraction of European financial resources under Russian banking and regional administration guarantees.
French beef heifer sales for selection. A project advanced by the Eurafrique envisages exports of 33,000 head to a total 300 million francs to the Belgorod, Moscow, Rostov, Tver, Tyumen, Orenburg and Perm regions and the Stavropol Territory.
Financing will be arranged via Russian banks authorised by the COFACE French corporate foreign trade insurers. Negotiations are underway for credit terms with due consideration for the calving period necessary to cover all expenses.
French partners demanded detailed information about fodder and other conditions to be provided for the animals, and Russian commercial banks' intentions to guarantee financing.
Milch heifer sales. The Jeune Diffusion and the Agro 2005 are preparing four regional projects for the Kaluga, Tyumen and Kurgan regions and Tatarstan to import 20,000 heifers to a total 250 million francs within five years to selected farms.
A spokesman of the Paris Mutuel Urbain is interested in stepped-up contacts with Russian horserace dealers to introduce betting outside racing grounds.
The Voronezh farm project. The Louis Dreyfus and several local rain-growing farms established the Drevo joint venture, taking up an initial 20,000 hectares with prospects to spread to 100,000 within the next three years.
The project will be financed from partnerly contributions and IFC company leases to purchase equipment and seed. The project owes its attraction to a combination of farming and financial knowhow and the use of leasing as a funding pattern in keeping with the recoupment rates of grain-growing.
Vineyard revival in the Temryuk district of the Krasnodar Territory and the establishment of a Russian-French grape selection centre in the Kalinin district, Krasnodar Territory.
A contract signed by the Temryuk district administration and the Jean-Guy and Bruno Arrive selection company envisages supplies of 15 million certified saplings to an annual three million within five years.
The partners intend to establish a Russian-French centre for grape cloning and sanitary selection in the Kalinin district of the Krasnodar Territory. France will be financing the endeavours via Russian and French banks with both governments' guarantees. The Russian partners deem it reasonable to offer the initiative to the federal government for guarantees of the Ministry of Finances. The latter project is estimated at 180 million francs within five years.
St. Petersburg malt-house. France came out with a project for Soufflet Co. cooperation with the Baltika brewers to establish a major malt-house in St. Petersburg. The tentative French partners applied to Russia's government for information about expected customs duties reforms. Malt and barley duties will not increase, reassured the food and processing industry department of the Ministry of Agriculture and Food Industry.
Veterinary. An ad hoc team for foodstuff safety and quality under the Russian-French agro-industrial committee had its 11th session in Moscow, 12-13 January1998, co-chaired by Yuri Nikitin, in charge of the board for standardisation and quality certification of Russia's Ministry of Agriculture and Food Industry, and Bernard Balle, in charge of the board of food quality, veterinary and plant sanitary of France's Ministry of Agriculture, Fishing and Food.
The conferees pointed out contacts rapidly progressing in the latter half of 1997. The following documents were coordinated and signed within the six months:
French partners pledged to simplify visa obtaining by Russian veterinaries who go to France to monitor beef and pork exports.
Recognition of epizootic stability in Department No. 35, with one instance of BSE in 1991, Russia agreed to strike it out of its black list and so authorise beef exports.
Concerning exports of French beef cattle to Russia, the Parties agreed to draw up a veterinary certificate form proceeding from previously coordinated general veterinary provisos. France is to draw a list of departments from which exports to Russia have been authorised, and will guarantee that exported animals do not come, geographically and genetically, from such countries and French departments in which BSE was earlier registered. The list and draft certificate will be adopted upon mutual approval after a team of Russian veterinary doctors and experts visit France.
A veterinary certificate of bull semen is also being elaborated. France will soon send an expert to Russia for an official recognition of the competence of Moscow's Research Institute of Experimental Veterinary laboratory to diagnose horses intended for exports to France.
The partners agreed for analyses of certification patterns to rule out duplication in order to simplify procedures in foodstuff exports/imports.
The Parties agreed to concentrate on the following issuesfor an agreement on research and technical cooperation: (1) Diagnostics of animal diseases with priority for poultry and horses. (2) Fighting rabies and foot-and-mouth disease in team with respective international organisations. (3) Certification in conformity with WTO standards.
Protection of names of provenance. As the Parties recognised, Russia fully complies with its pledges to abolish the names "Sovietskoye Champanskoye" and "Cognac" for exports in conformity with previous understandings.
As both Parties expressed a shared determination to fight forged articles--in particular, foodstuffs designated by protected place-names, they elaborated measures within obligations made by the agro-industrial committee and approved at a session of the Franco-Russian Council.
In compliance with EU premiss and the effective Russian laws, and taking into consideration a compulsory demand for reliable and sufficient label information about the product, which is necessary to the consumer, the Parties agreed to come back to the issue. As they see the matter, this measure is aimed to supply exhaustive information, and will promote cooperation for the protection of place-names and raise the efficiency of efforts against counterfeiting.
The Parties agreed to further promote cooperation in alcoholic beverage quality control in 1998. Russia informed France, on the latter's request, about its established beverage certification, foodstuff labeling standards--some stipulated by pertinent regulations, and supplementary regional steps to streamline sales. In this, France announced an intention to apply to Russia's State Committee of Standardisation for reciprocal recognition of alcoholic beverage certification.
Plant selection and protection. Debates led the team to express its satisfaction with the following:
Sugar. Sugar production is one of Russia's critical and most vulnerable economic branches. The industry fills no more than 30% of national demands out of home-grown beet, whose yields shrink with every passing year. The 1997 output was the smallest within the last 40 years. Almost a half of production facilities stand idle with raw material shortages. Equipment wear and tear amounts to 60%. Outdated machinery account for miserly yields and ineffective use of sugar beet, high production costs and produce prices. The central engineering base is outside Russia with the Soviet Union's collapse. The current economic situation makes it next to impossible to find domestic financial sources for any considerable steps to support the industry at its present-day level, let alone expand it. The government approved a Sugar federal target programme on 1 March 1997, yet money shortages make its implementation unaffordable.
France is one of Russia's most promising partners in that field, with its sophisticated beet-growing and sugar-refining knowhow and equipment based on an up-to-date engineering. It repeatedly expressed its eagerness to cooperate in that field and offered government credit lines for Russian beet-growing and sugar-refining development projects. French companies are more active than any others in Russia in that sphere of contacts.
Both countries have adequate infrastructures to ensure this all-round cooperation on whatever scale, including the establishment of Russian-based manufacture of the latest machinery and equipment for that economic branch.
In February 1996, Victor Chernomyrdin, Russia's Prime Minister, passed to his French counterpart a written message proposing bilateral cooperation to encourage Russian beet-growing and sugar production, and a request for a 850 million franc target credit line. France offered a positive response and is expecting of Russia practical steps to formalise its request. The sugar beet issue is permanently qualified among top priorities and the most promising channels of Russian-French contacts.
Sucden company, which occupies a leading position in this field of Russian-French cooperation, is represented in Russia by the Sucden-M(Moscow) joint-stock company, cooperating with the Russian Sakhprod corporate traders and investors. In France, the Sucden heads a consortium of close on 20 specialised companies to ensure the implementation of investment projects on even the most ambitious scale. Russia's Sakhprod, in its turn, has smooth and ramified contacts with R&D, foreign trade, branch and regional agencies and respective sugar refineries.
The Stavropol Territory is implementing its Kochubei sugar project on the basis of the Sucden-Sakhprod network and a French government credit line of 1992. It is designed as future leader of Russian sugar industry, complete with a beet-growing farm and a large sugar refinery. Its machinery and equipment are imported from France to a total US million. Tatarstan started, five years ago, the implementation of a project at an annual average US million, on a commercial-credit arrangement to shift beet-growing to the latest techniques and technologies. Combine harvesters and other necessary machines will be manufactured locally. The updating of the Dobrinka sugar refinery in the Lipetsk Region, to a rough total US million, is in its final stage on a full commercial footing. Implementation is starting of a major beet-growing project to ensure supplies to the refinery. The first stage, of 1.5 thousand hectares adjacent to the plant area, was commissioned in 1998. Farming projects are developed or implemented in many parts of Russia. Machinery is being supplied, and sowing financed, with transactions paid by produce obtained as the result.
Several projects have taken shape by now, mainly under the federal Sugar programme. They have the support of regional governors and appear the most promising for French-partnered implementation and on the basis of a tentative French government credit line.
An intergovernmental agreement on research and technological cooperation of 28 June 1992, is the basis of Russian-French contacts in that field.
Russia concentrates its implementation efforts on contacts in research and technological priorities, streamlining the patterns of its support, and promotion of industrial implementation of the achievements of joint R&D.
At present, bilateral research and technological cooperation is progressing in a wide--in fact, exhaustive--range of spheres. The current stage is characterised by extensive development of direct contacts between research centres and teams of the two countries.
A joint committee for research and technological cooperation, established in 1994, focuses attention on the elaboration of initiatives for the most beneficial conditions to step up cooperation, recommendations to streamline its patterns, etc. The committee had three sessions.
The latest, of April 1998, adopted, on a Russian initiative, a coordinated decision to draw a list of projects, which will help to concentrate financial and organisational potentials of the Parties on priority projects.
Joint project contests are the principal means of list formation. Efforts are underway for initial contests in mutually coordinated fields--biotechnologies for the agro-industrial complex and transport fuel.
Of major importance for Russia is search for the best-possible managerial and performance patterns of the research and technological sector in a market economy. An understanding was reached for cooperation to focus at its initial stage on training research managerial personnel. France is willing to make sufficient allocations to finance Russian personnel training in French government research institutes and companies.
The Russian Ministry of Science and Technology directly participates in the financing of over 30 projects involving French-based companies and research institutions in such priority fields as physics, power engineering, new materials, computer technology, biotechnology, the agro-industrial complex, oceanology, and others.
Prominent among these projects are reactor antineutrino studies by the Kurchatov Institute of General and Nuclear Physics and the National Institute of Nuclear Physics; and application studies of superconductive power accumulators for generator and power system control by the All-Russia Research Institute of Engineering and the Electrotechnical Research Centre.
Implementation is underway of a memorandum for research and technological cooperation in ocean studies between Russia's Ministry of Science and Technology and the IFREMBR, French institute for sea resource studies. The efforts comprise a wide range of fields from oceanographic gauge design to studies of fish weight fluctuations.
The Russian ministry is rendering financial support under this agreement to a number of projects—in particular, the designing of a new type of hydrophysical instruments based on multichannel laser interferometry. Basic joint projects are financed not only nationally but under certain international programmes, e.g., Copernicus, or the International Research and Technological Centre.
Tying the ministry and the French Antenne-Provence Association is an interbranch agreement on high technology cooperation. A bilateral project is being drawn for an information network to link leading research institutes in Moscow, Perm, Novosibirsk and other Russian cities with French research centres and allow parallel computations with both countries' powerful hardware. The project will be developing on a high-speed telecommunication line commissioned in 1995 to connect the Moscow State University and the French RENATER research and educational network. Project thinktanks are promoting the establishment of a Moscow-based international commutation centre on a currently blueprinted high-speed rail, Moscow-Paris.
The Russian ministry forwarded to its French partners practical initiatives to step up biotechnological research contacts. Proceeding from unique R&D unprecedented in the world, these proposals concern tentative demands of French medical, cosmetic and food industries and envisage extensive cooperation from research to its industrial implementation. Similar proposals oriented on potential regional demands were forwarded to provincial authorities of Burgundy.
Provence-Alpes-Cote d'Azur, a pioneer region in terms of research and technical potentials, has close links with Siberia to store positive experience of interregional exchanges of the latest technologies.
Prospects are under study for the establishment of a specialised mixed information/consultation structure to organise and promote Russian-French technological exchanges at a regional level with branches in Paris, Marseilles, Lyons, Moscow, Nizhny Novgorod, Perm and other cities.
Promising cooperation lines include the establishment of joint task forces and institutes for specificresearch, technological and technical problems, on the pattern of the Russian-French institute for information technologies and applied mathematics, established with support from the Moscow State University, the French National Institute for informatics and automation, and Russia's Ministry of Science and Technology. Also lucrative appears closer teamwork to implement the potential of Russia's major research installations, and French participation in Russian research reforms and personnel training, in particular, beginner researchers and research managers.
Aviation. Russian-French cooperation in the aviation industry is developing along the following lines:
1. Development and production of the MI-38 helicopter by Eurocopter-France Co. and its Russian partners—the Moscow-based Mil helicopter plant and the Kazan helicopter production amalgamation.
Elaborated since 1989, the project is on a target programme for Russian civil aviation development. A schedule proceeding from federal financing of the Mil plant, as head designer, envisaged mass production since 2001. A Russian-French joint venture, the Euromil, was established in 1994 to manage and coordinate the project.
The business plan earned approval from the EBRD, which, however, demanded the partners' solidary responsibilities as a proviso for project financing. The partners found the arrangement unacceptable.
The problem might be settled if the MI-38 R&D were included in the Russian-French credit line. The company requests US million repayable within four years after commencement of mass production.
The project envisages development, mass production, sales and post-sale maintenance of an annual 20 MI-38 helicopters of a medium freight-carrying capacity. Market studies revealed Russian demands at 200 and 100 abroad.
Investments are intended to go to the financing of final improvements on the design documents, test aircraft manufacture, testing, mass production organisation, and purchase of Pratt & Whitney engines (USA).
2. Development, mass production and sales in Russia and third countries of a promising training plane, MIG-AT.
The MIG amalgamation and the GosNIIAS research institute participate in the project on the Russian side, and the GRTS group on the French, which comprises Snecma and Turbomecat (engine), Sextant (avionics), Auxilec (starter generator) and Misseier-Bucatti (hydropump).
Joint R&D started in October 1992, when a venture-sharing contract was signed by the MIG and the Snecma. The MIG, GosNIIAS and Sextant made a cooperation contract the next year. Further on, equipment supplies were made for one prototype plane, the airframe was made and assembled, and the personnel trained.
No less than 15 aircraft are to be manufactured before the make can be certified by the Russian Air Force. Engine and other equipment pruchasing contracts will be made with the GRTS, Sextant, Messeier-Bucatti, Auxilec and other French-based companies. Eleven out of the 15 planes are to be sold, while four will stay in the Air Force.
As Presidents Boris Yeltsin and Jacques Chirac were negotiating in Strasbourg and Moscow, September and October 1997, the Russian president raised the MIG-AT issue, deeming that it was high time to finish the works. Two contracts have been signed for now in the project framework--for supplies of 20 Snecma engines and 15 sets of electronic equipment by the Sextant Avionique to a total 450 million francs. The highest for today achievement of aviation for training jets, the MIG-AT suits for pilot training from ABCs to advanced level, and allows to enhance general professionalism by 50% to 60%. Preparations for mass production are over, six planes are under final assembly, and another ten at the various stages of manufacturing.
A contract was made with the French companies for joint promotion of the MIG 38 in transnational markets. Partnership with France promises Russia an emergence into new, French-influenced arms markets. Spectacular technical and economic effects of the project allow to make loans for mass production programme implementation. According to estimates, the loans will be fully repaid within eight and a half years.
The MIG company invested in the programme US million of its own money, starting in 1992. Now, the project destiny depends on whether the Russian government determines to issue sovereign guarantees for a French credit of US million. The French partners are ready with letters on behalf of the Finance Ministry to include the project in a 1.5 billion franc credit line, and on behalf of the Delegate-General for armaments, which voices approval of the project by the Ministry of Defence and vouches to certify the MIG-AT in a French testing grounds for foreign customers.
As Igor Sergeyev, Russia's Defence Minister, was visiting France, January 1998, the host side expressed its readiness to finance the mass production of the MIG-AT as training and military plane alongside other joint projects on military technological cooperation. As the visit was summed up, the Russian President and government ordered to the ministries of the Economy, Foreign Economic Contacts and Finances to study prospects for government guarantees of French loans, aimed to purchase engines from French-based partner companies.
The implementation of the project is lucrative for Russia politically and economically alike. French experts evaluate the MIG-AT potential market demand at 1,500 items to promise steady assignments to the MIG amalgamation for the next 15 years. France, nevertheless, is refusing to purchase these planes made jointly with Russia.
3. Cooperation with the Airbus Industry for a jumbo liner seating 600 to 700. The company proposed joint R&D to Russia on a exposure sharing arrangement 18 months ago. As the Tupolev concern, the Ulyanovsk-based Aviastar Co. and Hydromach Co. of Nizhny Novgorod analysed the offer, they chose to manufacture the chassis and wing torsion boxes.
Mr. Pearson, Airbus Industry president, made an official invitation to Russian aviation industry to join the project during a Le Bourget aerospace show.
The Airbus Industry and Russia's Ministry of the Economy signed an agreement on cooperation in civil aviation during the Moscow aircraft show, MAX '97. Basic agreement by both sides to work together for a superjumbo jet was one of the crucial cooperation aspects according to the document.
Russia needs large sums to develop and put out its parts of the plane, and this is one of the greatest problems in agreement implementation.
4. R&D on a Russo-European military cargo aircraft developing on achievements materialised in the Russo-Ukrainian plane AN 70.
Russia's ministries of Defence and the Economy made considerable efforts to get cooperation with Western Europe going in that field. There were conferences with Defence Ministry spokesmen of Germany, France, the U.K. and Italy, which showed that the French President and Germany's Chancellor would have the final say as Britain and Italy preferred to purchase US-made planes.
Close contacts have been achieved with Ukraine—suffice it to mention an understanding for a bilateral working team on the project. There are greater chances to promote the Russo-Ukrainian project than before.
5. The Dasseault inspected the Saratov aviation works to consider opportunities to start production of Falcon-type business class aircraft. A business plan is being drawn.
Space. Bilateral cooperation in this field proceeds from an intergovernmental agreement of 30 June 1966 and a protocol to it of 4 July 1989. Another agreement was signed as Prime Minister Victor Chernomyrdin was paying an official visit to France, November 1996. This agreement on cooperation in space research and use for civil purposes was meant to replace the 1966 instrument.
Russia has ratified the agreement by now, unlike France, whose National Assembly is still considering it. The document aims at further mutually beneficial progress of bilateral cooperation and opens new prospects of space teamwork proceeding from the available versatile partnership links. A customs protocol to the agreement is presently under discussion.
The Russian Space Agency and the CNES, French National Centre for Space Research, signed a cooperation agreement in July 1992.
Joint studies of the near space by the spacecraft Meteor, Orel and Prognoz, planetary studies by the Luna and the Mars laid a lasting foundation of bilateral space cooperation back in the 1970s.
A breakthrough was made as the French astronomical satellite Neige 3 was launched by a Soviet booster, in June 1977, to study gamma flash-ups.
Of major importance were projects Vega (studies of Venus surface and atmosphere, and of Halley's comet) and Granat (mapping space gamma and X ray sources). The Granat, launched with a French-made Sigma telescope on board on 1 December 1989, is stilloperated.
There were six successful joint flights on board the Russian orbital stations Salyut and Mir. Claudie Andre Deshays, French woman pilot, took part in one of the expeditions, of August-September 1996. French space pilot Leopold Eilhartz took part in the latest flight on a long-term interagency programme, January-February 1998. There is an understanding for another French pilot's 130-day sojourn with the Mir for 1999.
In Earth observation from space, August 1996 saw an experimental reception by the Obninsk satellite information reception station of information from SPOT spacecraft. Two demonstration flights were made to monitor forests and oil pollution near Siberia's Surgut.
CNES-cooperated efforts are underway to prepare for satellite monitoring of floods and hzardous substance transportation as proposals are drawn upfor a global European-based monitoring system for major risks--floods, earthquakes, forest conflagrations, man-caused nuclear and chemical accidents, and dangerous substance transportation.
In conformity with the agreement of 30 June 1966, joint Soviet-French projects were implemented under a non-currency arrangement. The issue of compensation for Russian expenditures was lately raised in view of budget limitations. Commercially-based projects appeared, e.g., the four latest flights in the Mir station. The 1999 flight will also be commercial.
French experts are active in biological and microgravitation experiments in Russian shuttle craft. The Bion series craft saw a wide range of biological studies with experimenting on biopreparations and on animals--mice, monkeys and birds.
The first stage of long-term cooperated research in microgravitation on board Russian spaceships was a two weeks' flight of the Russian Photon 10 satellite, February 1995, with a 75 kg French biological installation, the IBIS, on board. October 1997 saw successful experiments in the Photon 11. Prospects are debated for further joint experiments in the Photon 12, to be launched in mid-1999. Though this programme is also commercially arranged, its implementation encounters many problems with inadequate Russian financing.
The Russian Space Agency and the CNES signed a contract for a French share in spaceship R&D and launchings on several other programmes, the SCARAB among them.
Active in space teamwork on the French side are the Aerospatiale, the Matra, Alcatel and SEP; on the Russian the Central Specialised R&D Bureau of Samara, the Lavochkin research and production amalgamation of Moscow, the Krasnoyarsk-based Applied Mechanics research and production amalgamation, and the Chemistry Automation R&D bureau, Voronezh. In particular, cooperation concerns boosters, communication satellites and engines.
The most graphic instance of current industrial cooperation is provided by a project for new-generation satellites the CESAT and the Express A--the former for the European satellite communication organisation, and the latter for domestic use. Responsible for the project are the Applied Mechanics research institute of Krasnoyarsk and the Alcatel. Started in 1996, the project includes a platform designed by the Krasnoyarsk company, and board transponders by the Alcatel. French-made equipment will be installed in Russia. Simultaneously, the Eutelsat expressed its interest in using Proton boosters to launch its satellites on geostationary orbits.
The research-and-production amalgamation PM and Alcatel and Aerospatiale signed a contract, in April 1998, for the manufacture of three Express C communication satellites, the first to be orbited in mid-1999.
Talks are underway with the Eutelsat to order a Russian-manufactured CESAT-2 satellite for television livecasts.
Industrial cooperation made a stride with the establishment, in August 1996, of the Starsem joint venture, with participation of the Russian Space Agency, the Samara-based Progress R&D bureau, and the French Arianespace and Aerospatiale. At its initial stage, the company will focus on joint commercial exploitation of Soyuz boosters, later to switch to joint satellite projects, microgravitation research, etc. No less than 12 launchings are being planned for the US system Globalstar before 2000 undera contract signed with the US-based CC/Laurol early in October 1996. The endeavour requires million to bespent within three years to manufacture a series of boosters and improve the infrastructure of Russian space centres.
Nuclear power. Russo-French research and technical cooperation proceeds from intergovernmental agreements on nuclear power cooperation, of April 19, 1996, and interbranch understandings between Russia's Ministry of Nuclear Power Industry and the French CAE, commissariat for nuclear power.
Cooperation concerns nuclear safety, future-generation reactors, nuclear station personnel training, fundamental research, public information, and the economic and legal aspects of nuclear power engineering.
Industrial cooperation mainly concentrates in the nuclear fuel cycle. A million contract has been drawn for Sema Group to supply Balakovo and Kalinin power station equipment. Termatome will supply safety equipment to the Kursk, Novo-Voronezh, Kola, Kalinin and Bilibino stations on an agreement with the consortium Termatome-Belgatome. A commercial contract with Intercontrol envisages purchase, adjustment and implementation of a reactor body monitoring installation.
Highly-enriched uranium supplies to France. The French are alarmed as Russia is not complying with its pledges under the intergovernmental agreement on research and technological cooperation and highly-enriched uranium supplies, signed in Moscow on 19 April 1996.
A framework agreement signed in Paris, 7 June 1996, by the Russian ministry and the CAE to develop on the previous envisages 495 kg of highly enriched uranium to be supplied within nine years, of this 165 kg in 1996 for the Grenoble-based Max von Laue/Paul Langevin Franco-German Institute, and another 125 kg--an annual 62.5 in 1997 and 1998--for the French research reactor Orphee.
France has not received any uranium to this day with the agreement shelved due to Russia's Finance Ministry objections. In particular, it points out, the Ministry of Nuclear Power Industry failed to specify financing sources for uranium reprocessing. The nuclear ministry reported the situation to the federal government, which ordered to involved agencies to find a mutually acceptable solution as soon as possible (instruction of 19 December 1997). Another instruction soon followed (22 January 1998) to order quicker compliance with earlier governmental instructions.
In conformity with the latter document, both conflicting ministries addressed thegovernment in March 1998, with a joint draft resolution for highly-enriched uranium supplies to France.
Cooperated safe destruction of nuclear weapons and civil use of arms fission materials:
The Parties implemented research programme AIDA under that agreement. One of its parts envisaged the determination of basic parameters of an installation to produce mixed uranium-plutonium fuel, MOX.
Tripartite cooperation on MOX. Russia, France and Germany pooled efforts to elaborate an economically and ecologically rounded concept for arms plutonium conversion into MOX fuel. A tripartite cooperation programme envisages production and installation of three experimental MOX fuel elements in Russian light water reactors, as well as designing and subsequent construction of a Russian-based MOX fuel demonstration plant.
This cooperation is expected to base on a tripartite intergovernmental agreement whose draft, coordinated with France and Germany, has been forwarded to the Russian government.
When Moscow was scene of events related to a G-8 ministerial conference on power industry, 31 March and 1 April 1998, the Ministry of Nuclear Power Industry hosted a conference with C. Pieret, State Secretary for Industry of France. The conferees advanced new initiatives to step up bilateral contacts in the nuclear field.
1. ERC Project. Framatome and Siemens of France and Germany, respectively, are finishing blueprints for an European pressurised water reactor, ERC. An initial draft envisaged manufacture in Germany and France, with subsequent exports. However, there are no construction bids to this day. Germany suspended a nuclear power development programme. France is planning construction of more nuclear power station units of its own design to replace discarded ones. So there are no clear-cut prospects for the project--but then, France and Germany want their spendings back.
Russia is willing to regard prospects for its domestic use in new power stations and to replace discarded units. It is advancing the following provisos: Russia must fully integrate into the Franco-German project; it must perform a greater part of unit equipment manufacture assignments; units may be built on a commercial credit; the credit will be repaid in kind, by electricity supplies to Europe, Asia and the Far East.
Russia may view as a target project the idea for a nuclear power complex on the Russian Pacific coast up to 8-10 gwt with ERC units to supply electricity to the Russian Far East and to China, Korea and Japan.
2. French participation in R&D on the BN 800 fast reactor. Taking into consideration that Russia and France favour the concept of a closed fuel cycle, we see a considerable potential to step up fast reactor cooperation. At present, France suspended a national fast reactor programme, and is interested in the work going on with bilateral cooperated efforts for a Russian-based reactor of that class.
Medicine. Bilateral contacts are implemented in conformity with an intergovernmental agreement on cooperation in health services and medical research, of 9 January 1969, and a protocol signed as a follow-up by the two Ministries of Health, 4 June 1993.
More than that, an agreement was signed in Paris on 2 December 1994 for cooperation in medicine registration and quality control between Russia's Ministry of Health and the French Agency for Pharmacology, and the same ministry and the French National Association of Pharmaceutical Industry.
A session of the Russo-French council for economic, financial, industrial and commercial issues determined, in November 1996, to establish a bilateral ad hoc team for health services.
On 21-22 April 1997, Moscow hosted its maiden session, which resolved to channel cooperation along the following lines: establishment of a joint laboratory for medicine quality control; medicine safety cooperation, information exchanges on medicines and their advertising; cooperation in medicine price formation and pharmaeconomics; streamlining hospital management; training hospital directors, managers, engineers, technicians, the medical personnel and health insurance experts; sanitary and epidemic disease prevention; efforts against contagious diseases, especially AIDS; cooperated prevention and treatment of cancer and cardio-vascular and psychiatric diseases.
Coordinators for Russia and France were appointed for those projects.
The 3rd session of the Russo-French Grand Commission at the prime-ministerial level, 31 October 1997, saw the signing of a memorandum between Russia's Ministry of Health and the French Agency for Pharmacology. It envisaged a medicine inspection laboratory to be established in Moscow on the basis of the Russian National Research Institute of Medical Instrument-Making under the Russian Academy of Sciences. The project amounted to an overall million to be financed by the French (60%) and the Russian (40%) side. Project coordinators had routine conferences in 1997-98, at which they determined preparations for feasibility studies, actual work, and partners' duties.
France passed to Russia's Health Ministry, on the managerial training project, a draft training programme for medical workers of all levels. It was forwarded for consideration to the Russian Academy of Postgraduate Education.
Psychiatric cooperation is further developing between the Serbsky State Research Centre of Social and Forensic Psychiatry and the Esquirol Hospital Centre of Psychiatry.
The bilateral ad hoc team summed up the year at its session in Paris on 23-24 April 1998.
Medical technological certification is to be expanded.
Joint research will go on in oncology, cardiology and psychiatry. The number of cooperating institutions of these specialisations will increase. The commission will encourage direct contacts between Russian and French therapeutical and disease prevention institutions.
An initiative was advanced for exchanges of cardiosurgeons operating on an open heart and specialising in children's surgery.
Russia will provide information about a pioneer non-invasive method of measuring cholesterole concentration in blood, as elaborated by the Russian Research Institute of Physico-Chemical Medicine.
In contagious disease epidemiology, the partners determined to establish a subgroup to highlight practical fields of cooperation in vaccination strategies—in particular, for epidemic parotitis, and in HIV and AIDS efforts.
The implementation of one particular project is causing alarm. It concerns supplies to Russian medical institutions of the latest angiographical technology and comprehensive supplies of equipment for blood transfusion stations out of a 140 million franc French credit. Regrettably, repeated attempts to coordinate the project with the Finance Ministry of Russia were no success for over a year.
Investment into the progress of Russian medical industry was proposed again and again at conferences with the French business circles. The Russian Ecolab and the Sanofi of France got going joint production of an AIDS diagnosticum. Negotiations are underway for joint measles vaccine production between the Institute Merieu and Russia's unitarian government enterprise for bacterial preparations.
The French demand the signing of a supplement to agreements between the Russian Health Ministry and France's National Syndicate of Pharmaceutical Industry and National Medical Agency for pharmacological cooperation of 2 December 1994. This supplement ought to concern registration in Russia of French-manufactured vaccines and serums.
Russia goes on registering medicines made in France. It had registered a total 388 by 1 April 1998, and another 124 are under registration.
In 1995-97, Russia and France had several seminars on new medicines and international multicentre studies of new preparations.
According to statistics of the Board for pricing trends and authorisation of medicine and medical equipment export/import, Russian import licenses issued in 1997 amounted to a total million. France ranks second after Germany in terms of licenses issued to export medicines to Russia. Dominating imports are rheumatological preparations, pain-killers, antibiotics, antiseptics and cardio-vascular medicines.
Chemical and medical industries. Russian industrial companies are considering the Rhone-Poulenc's offer to update several pharmaceutic and pesticide factories and thoroughly upgrade a veterinary vaccine factory.
The Rhone-Poulenc is taking part in the joint venture, Sertov, a cigarette factory on the basis of the Khimvolokno chemical fibre works in Serpukhov near Moscow. The concern invested million in the project, and its share amounts to 90% of the Sertov authorised capital. Adjustment is finished of four conveyor lines working round the clock to put out an annual 3,000 tons of uncut cigarettes, and the Rhone-Poulenc intends to raise the output to 10,000.
Exemplifying successful medical industrial projects is Moscow's Akrikhin chemical pharmaceutical factory, which joined hands with the Servier of France to produce an annual five million boxes of the highly effective Diabeton.
Automotive industry. The Renault is cooperating with the Moscow municipal administration to start a joint venture, the Autoframos, at the AZLK (Moskvitch) autoworks, which will produce Megan Classic cars. This is one of the most promising bilateral high-tech projects. The French partner intends to invest million within the next two and a half years for latter-day production facilities with an annual output of 120,000 cars, complete with regional offices and maintenance centres.
The first stage will include car assembly next to launch component and spare part production in Russia, and build a painting shop. Contracts were initialled in March 1998, to license Megan Classic-type car assembly and sales, spare part supplies, engineering and consulting works, finished article and spare part supplies, and leasing. All these contracts allow to get the venture going immediately after its foundation, planned for June 1998.
The Renault also intends to take part in building an engine factory in the AZLK, with an annual output of 250,000. The municipal administration promises to exempt the Autoframos from all municipal taxes.
Presently, Moskvitch and Renault are working on an investment project and a business plan. In compliance with presidential decree No. 135 of 5 February 1998, and federal government resolution No. 413 of 23 April 1998, total investment is to make at least 1.5 billion roubles within five years, and the share of expenditures made in Russia five years after project implementation starts and to be charged to production costs must amount to no less than a half of end product cost. The Autoframos will be entitled to government assistance and privileged conditions after its investment project and business plan are approved and all demands complied with.
Communications. The following ambitious projects are at implementation or development stages in telecommunications:
At present, the world has two satellite navigation systems, the Russian-based Glonass and the USA's GPS Naustar. In a bid for monopoly control of the navigation receiver market, the USA is going to all lengths to harass Glonass users in the world market. France and other European countries, though with a wide access to the GPS, are willing to cooperate with Russia for combined Glonass/GPS receivers, which have independence, high precision, a global scope and increased result reliability.
Market studies finished by proving lucrative market prospects--demands estimated at 500,000 receivers to a rough total of billion. There are a plenty of solvent tentative clients. Proceeding from their actual opportunities, the partners expect, within ten years, to seize a market demanding about 100,000 receivers. The GosNIIAS and the Sextant Avionique have signed a contract for now. According to preliminary estimates, Glonass/GPS R&D, certification and start of mass production demand a million loan to be paid back within seven years.
Housing and municipal services. An ad hoc cooperation team was established to give a practical purport to a Russo-French treaty of friendship, mutual accord and cooperation, signed on 7 February 1992, and to related agreements--in particular, a protocol of economic cooperation, 6 February 1992, and an administrative cooperation agreement between Russia's Ministry of Construction and France's Ministry of Infrastructure, Housing, Transport and Tourism, signed on 22 October 1992 and confirmed on 21 November 1996, by Evgeni Vassin and Bernard Ponce, respective ministers.
The two ministries started active practical effor in October 1996. Joint conferences descussed key Russian housing and municipal service issues--in particular, forms and methods of municipal management; legal framework for housing repair financing; improving patterns of older standard housing developments upgrading; energy saving to reduce maintenance costs of the municipal engineering infrastructure; and municipal tariff policies in public services.
Two Moscow seminars of 1997 developed on those topics to discuss private, government and municipal companies' partnership to improve the municipal infrastructure and finance house upgrading. Represented in these efficient gatherings were, for France, the Embassy, the Ministry of Infrastructure, Housing, Transport and Tourism, and leading companies. Among the Russian delegates were regional administration representatives, city mayors, and housing and municipal economic experts.
The two ministries' extending teamwork was greatly appreciated when the bilateral prime-ministerial commission gathered for its 3rd session in Moscow in October 1997.
In this context, the French government determined to financially support Russia in preparation for a World Bank loan of million to update water supplies and sewage networks. The money allowed the towns Volkhov, Vologda and Tver, prominent on the project, to afford social, technical and economic monitoring.
Bilateral cooperation in the municipal sphere is highly promising, and both countries are determined to step it up—in particular, for improving urban services and utilities, and waste removal and processing. Joint projects are in view.
Economic managers. France appointed the Agency for Technological, Industrial and Economic Cooperation under the Ministry of Economy, Finance and Industry its operator to implement a programme of a French-based Russian managerial training. The French Embassy in Moscow is responsible for actual contacts in Russia.
Standard managerial training consists of five weeks at an industrial enterprise, plus an introductory and a concluding week.
France defined priority programme areas--the Samara and Perm regions, the Krasnoyarsk Territory, and Tatarstan; and priority branches--telecommunications, food, aerospace, electrical engineering, petrochemical and automotive industries, and environmental protection.
Responsible for routine contacts with the French Embassy in 1998 were A.V. Sharonov, Deputy Minister of the Economy, and the secretarial staff of a commission for managerial training for the Russian national economy.
Personal selection for training in France is going on. The programme may be extended to include 200 persons. An initial group of 15 went to France in the latter half of June 1998.
An ad hoc team for personnel training is working under the Russo-French council for economic, industrial, financial and commercial issues. It sat in session towards the end of 1998.
Russia pays trainees' travelling expenses to France and back, while the host country pays for their training, accommodation and medical insurance while in France, and gives them pocket money. Training terms for company managers and civil servants may be improved and amended as experience is stored. Both countries will regularly evaluate the results.
Personnel training for the Russian aviation industry. Joint initiatives of the GosNIIAS, the Thomson-CSF and Russia's Higher School of Economics.
Russia's entire economy is in dire straits with government contracts critically shrinking. The aviation industry is no exception. Partnership with West European industrial companies offers a way for improvement. France is specially welcome here as leader of European aviation industry. Many Russian companies engage in joint R&D with the Thomson-CSF and other French aviation companies, which are willing to consider prospects for joining hands with Russian colleagues for development and production of sophisticated technological systems in case they vouch for ready produce to be up to international norms and standards.
The GosNIIAS offers its basis for a department of the Thomson University to train managers of major technological projects in Russian aviation industry.
The Thomson University was established for training and retraining the personnel of the Thomson-CSF in France and its overseas branches in software, quality control, logistics, management and finances.
The GosNIIAS is proposing to train the Russian higher and medium-level managerial personnel of aviation industry. Students are to develop into large project managers able to meet the challenges of the world market, and cooperate with Western companies.
The initial stage of the programme envisages training of teachers and coaches at an European level to shift the training to Russia and reduce tuition costs.
Tuition lasts from a year to two, depending on the curriculum preferred by companies which send their personnel for retraining. Each curriculum includes two months of theoretical studies and another two of on-job training at the Thomson-CSF. The GosNIIAS monitors students on Internet arrangements as they work on training assignments. On-the-job training bases on actual projects involving French-based companies, and is supervised by coaches.
The classes promise Master certificates of the French High School Association in logistics of sophisticated technical systems. There are prospects for analogous certificates in software management on SPICE European standards and quality control on ISO 9000 standards.
Siberia. An Irkutsk regional delegation led by the vice-governor visited France, 24-27 February 1998, on an invitation of the association Europe-Baikal. Prominent among the delegates were the Irkutsk mayor and speaker of the municipal legislature, and top activists of the association Three Centuries and of the local branch of France's Friends Association.
The delegates met representatives of the French business community to discuss prospects for French corporate participation in implementing a range of projects based in the Irkutsk Region. In particular, Sofreavia Co. managers reviewed prospects to update the Irkutsk airport; the Alcatel, developments of cellular and other telephone networks; the Generale des eau, improvements of the hotel infrastructure and municipal service management; and the Lyonnaise des eau, municipal service management.
A protocol was signed as the Irkutsk municipal administration determined to cede to the Europa-Baikal Association the Kuznetsov House, an elaborate specimen of wooden architecture. After redecoration, it will be known as Europe House on the Baikal.
The Novosibirsk Region's contacts with France. The Russo-French Chamber of Commerce and Industry assisted Novosibirsk as it was hosting a 1994 show involving 24 French companies.
Novosibirsk-based industrial companies were active at the Toulon trade fair in October 1995. They met spectacular support from Russia's Consulate-General in Marseilles. Vice-governor V.P. Nekhoroshkov signed a cooperation protocol with the Chamber of Industry and Commerce of Provence and Marseilles. S.D. Zhadovsky, Russian trade representative to the Midi was authorised to represent the region's economic interests in France.
The Novosibirsk exposition was much admired at the Paris international fair, The Countries and Regions of the World, May 1996. The region took part in the event with assistance from the Russian Embassy and trade representation.
The region saw the 73rd Marseilles fair of September 1997 as a landmark in its contacts with France. Several Novosibirsk industrial companies were prominent at that international fair.
A French delegation led by Hubert Colin de Verriere, French Ambassador to Russia, and Louis-Andre Creiss, Minister-Councillor for economic cooperation, visited Novosibirsk in December 1997. The delegation represented 13 French-based companies.
The Ekran and Sibtextilmash industrial companies, the Institute of Nuclear Physics and the Mining Institute under the Russian Academy of Sciences, Siberian branch, export to France tungsten wire, titanium bar, glass cathode pipe bulbs, magnetrons, ionising irradiation measuring instruments, and pneumatic punches.
The Novosibirsk Tin Combine, one of the world's largest, cooperates with the French-based Transamine, which supplies its raw materials to the Siberian partner to get finished articles.
The Ousiba regularly purchases high-tec R&D from the Mining Institute.
The Rhone-Poulenc and the Innotech export medicines and medical equipment to the Novosibirsk Region, the Moulinex household electric appliances, the Loreal cosmetics, and the Maehestre fruit. One of the Novosibirsk bakeries has equipment from the French APV Co.
The Spie Batignolles finished construction of a lithium waste storage and reprocessing plant in December 1997. The Bouygues signed a contract to take part in a final stage of building thermal power station No. 6. Detergent production related to Dimo articles took start.
Contacts are budding with the High-Tech Roads association. Ties are getting ever closer between Novosibirsk research and educational institutes and the University Marseilles-Aix-11. Cooperation talks are underway for production and sales of a small-dose digital X ray installation, industrial accelerator supplies, and cooperation in research accelerators. There are prospects for a joint venture manufacturing ophthalmological optic instruments.
The Marseilles University hosted a conference on extending contacts with the region. Production samples on display had been delivered for the purpose. The conference elaborated practical recommendations and price standards necessary to promote Novosibirsk commodities.
The regional administration is getting corporate orders for many kinds of produce--lumber, prefab wooden houses, rolled metal, aluminium, fertilisers, cement and cement bags, many chemicals, polyethylene and polypropylene, electric generators, pipes, shale, adapters and other oil pipeline junctions, table and bed linen, textiles, and many other commodities.