Contacts at the highest level are the most important component of bilateral relations (which have been promoted by the opening of a direct communication line between the Kremlin and Downing Street). Boris Yeltsin's first official visit to Great Britain in November 1992 was the first step in this direction. The Russian President has visited the United Kingdom four times (the last being in May 1998), and British prime ministers have come to Moscow four times. In October 1994, Queen Elizabeth II made her first visit to Russia in the history of relations between the two countries. Russian Government Chairman Viktor Chernomyrdin has met five times with British prime ministers (he paid an official visit to London in March 1995).
Labour Prime Minister Anthony Blair made his first visit to Russia in October 1997. Mr. Blair confirmed the intention of his government to consider relations with Russia, which he called “British traditional historical partner in Europe”, as one of Great Britain's key foreign policy priorities. In particular, the British leader spoke of his willingness to allot 5 million pounds over three years for the training of up to 1,000 Russian managers (in addition to funds granted for these purposes by the United Kingdom within the framework of the TACIS programme).
Russian-British relations have a solid contractual and legal foundation. On 30 January 1992, Boris Yeltsin and Prime Minister John Major signed a Russian-British declaration in London, Partnership for the Nineties, as well as a memorandum on the establishment of Russian and British consulates-general in Edinburgh and St. Petersburg (in October 1997, a British consulate-general was also opened in Yekaterinburg). On 9 November 1992, the Russian President and British Prime Minister signed a basic Russian-British political document in London, agreement on the principles of relations, within the framework of which almost two dozen agreements regulating practical cooperation in various spheres have been made. Among the signed documents are agreements on cooperation in eliminating nuclear missiles subject to reduction and in the fight against air terrorism, a Joint Statement on the Non-Targeting of Strategic Nuclear Missiles, an Agreement on Economic Cooperation (an Inter-Governmental Commerce and Investment Committee was set up pursuant to it), a Double Taxation Convention, an Agreement on Cooperation in Education, Science and Culture, an Agreement on Scientific and Technical Cooperation, an Agreement on Cooperation in Peaceful Uses of Nuclear Power, and an Agreement on Cooperation in Combatting Crime.
Exchanges are being organised at the level of parliament leadership. In 1994, the State Duma chairman visited Great Britain, and in 1995 the chairman of the Federation Council of the Federal Assembly. On 10-16 October 1998, House of Commons Speaker made an official visit to Russia.
Relations are developing in the military sphere as well. In 1996-97, British defence secretaries visited Moscow three times, and an inter-departmental memorandum on cooperation and regulations on creating a commission for coordinating cooperation between the two defence ministries was signed. The first commission meeting was held in London in March 1998, and on 25 September 1998 a Memorandum on Naval Cooperation between the two countries was signed.
In January 1997, Interior Minister Michael Howard visited Russia. Russian Interior Minister Sergei Stepashin made a return visit to Great Britain on 17-19 June 1998. During this visit, a memorandum was signed on mutual understanding between the Russian Interior Ministry and British law-enforcement agencies on cooperation in the fight against grave crimes, organised crime and drug trafficking. Among the most significant undertakings of Russian-British cultural cooperation in 1998 were celebration of the 300th anniversary of the Embassy of Peter the Great to Europe and England and the project for erecting a monument in London to Soviet soldiers and citizens killed in the Great Patriotic War of 1941-1945, the foundation for which was laid on 9 May 1998 with the participation of Russian Foreign Minister Yevgeny Primakov. The unveiling ceremony is scheduled for 9 May 1999.
Russian-British economic and trade relations. Great Britain is among the first five of Russia's most valuable trade partners. Economic and trade relations are based on the Agreement on Economic Cooperation of 9 November 1992 and the Double Taxation Convention of 15 February 1994 (ratified by the Federal Assembly in March 1997).
The trade turnover between the two countries over the past decade has been maintained at a sufficiently high level with a positive balance in Russia's favour. In 1997, according to Russian statistics, it reached US billion. Russian exports account for US billion and imports for US billion. According to the results for the first half of 1998, the figures were up by almost 20%.
Raw materials account for the bulk of Russian exports (85% to 90%): crude oil and petroleum products (approximately 50%), diamonds and precious metals (almost 30%), nonferrous metals and finished articles (15%), chemicals and fertilisers (4%), and wood-pulp and paper products (2.5%). Deliveries of machinery and equipment and other mechanical engineering products have decreased over the past few years and amounted to approximately 1.5% in 1997.
An important factor curbing exports to Great Britain is the use of EU anti-dumping procedures with respect to several raw materials. Great Britain takes this problem with understanding and helped Russia to resolve it during the time it chaired the EU (January-June 1998). In December 1997, the European Commission approved a proposal not to classify Russia as a "transitional economy" with respect to the EU anti-dumping policy. This proposal was ratified at the meeting of the EU Council of Ministers on 27 April and went into force on 1 July 1998.
The interest of British business circles in Russian high-tech developments of the military-industrial complex, in both the military and civilian areas, has greatly increased over the last 2-3 years. In this respect, at the fourth session of the IGCIC a working group was set up for cooperation in the area of high technology. The group's first meeting was held on 12 May 1988 in Moscow.
Machinery and other equipment are the main commodities imported from Great Britain (35% of the import volume), followed by foodstuffs and agricultural products (19%), chemicals (12%), consumer goods (10%), medication (4%), and services (6%).
The total amount of funds allotted by Great Britain under state warranty for investment projects in Russia amounts to US billion. In October 1997, during his visit to Moscow, British Prime Minister Anthony Blair announced the decision of the British government to increase the amount of government-guaranteed investments in the Russian economy by another 500 million pounds. The Ministry of the Economy has drawn up a list of 26 projects based on this additional credit line.
More than 850 British companies operate on the Russian market. More than 300 of them have permanent representative offices in Russia (as of August 1998). The following British companies are most prominent in Russia:
In recent years, British business circles have been showing growing interest in the Russian provinces. Their presence in St. Petersburg, Nizhny Novgorod and Yekaterinburg is particularly noticeable.
The British are closely following the development of the financial situation in Russia. As chairman of the G-8, British Prime Minister Anthony Blair coordinated the development of a programme of action for western countries to stabilise the macroeconomic situation in Russia.
On 14 September 1998, Great Britain convened an emergency meeting of senior officials of the G-8 (Deputy Foreign Minister Georgy Mamedov and Deputy Finance Minister Mikhail Kasyanov participated in it from the Russian side) to draw up a joint policy on helping Russia out of its crisis. Basically, Great Britain's position consisted in Russia, as Mr. Blair stated, orienting itself towards a programme developed over a long period by international institutions and which will provide the only way out of the current situation.
Acknowledging the need to simplify economic and financial relations between the two countries, the British came forward with the initiative to create a British-Russian Financial Dialogue. Mr. Blair mentioned this idea for the first time in a conversation with Boris Yeltsin in Birmingham. In July 1998, Chancellor of the Exchequer George Brown sent Russian Finance Minister Mikhail Zadornov a letter in which he suggested holding a meeting of this forum once every year in Britain and Russia in turn. According to the British idea, the finance ministers would take part in these meetings, as well as experts from all interested Russian and British departments.
Cooperation between St. Petersburg and British organisations and enterprises. The foreign trade ties between St. Petersburg and Great Britain are characterised by steady growth. According to the results for 1997, exports to Great Britain amounted to US million (5.57% of St. Petersburg’s total exports, 5th place), and imports to US million (3.37% of the total import volume, 6th place).
British companies are still among the major investors in the St. Petersburg economy (fourth place after the US, Finland and Austria). In 1997, Great Britain invested US million in the St. Petersburg economy (9% of the total amount of foreign investments). There are 150 joint ventures with Great Britain operating in St. Petersburg (fourth place after Finland, the US and Germany).
The first British investor in St. Petersburg was a subsidiary company of Littlewoods Trading (a clothing outlet), which has been operating on the St. Petersburg market for four years. In 1997, when Littlewoods Trading ceased its activity on foreign markets, the venture was taken over by the British company, Point, which owns four shops in St. Petersburg.
The Rothmans is currently manufacturing cigarettes jointly with the Neva-Tabak company. The cost of the project is estimated at US million. In September 1997, a plant went into operation in Konnaya Pakhta. The cost of the project is US million. The company is actively attracting foreign capital to the city in the form of long-term investments, and there are prospects for investment in several of the city's hotel projects.
The Amour, which holds, under a sub-lease, a plot of land for 49 years, is building a large business centre in the northern part of the city along with the Avangard works. Under the terms of the project, no less than 75% of the construction work will be carried out by St. Petersburg development companies. The recoupment time is five years, and the cost US million.
Several foreign companies have controlling stakes in St. Petersburg enterprises. For example, transnational corporation Unilever (50% British capital) has a controlling stake in the Northern Lights factory and is planning to invest US million in the production of cosmetics.
In 1994, the Ede and Ravenscroft and the Fashion House company founded a Fashion House Nevsky Prospekt public company. Operating successfully in St. Petersburg, the company intends not only to expand its production, but also participate in restoring the buildings next to it on Nevsky Prospekt.
The British House Ltd. company is a leaseholder of the Atrium at 25 Nevsky, a business centre that opened at the end of 1997. The company has a large shop that sells British goods in this centre.
British companies have shares in St. Petersburg enterprises, in particular, the Baltic Sea Steamship Line, the North-West Steamship Line, and Sovavto.
The Otis (world-class passenger elevators) and Tambrands (wadding and technical products made from it) plants are operating successfully in St. Petersburg. They are frequently referred to as American firms, but are in fact subsidiaries of British companies.
British companies play a leading role in the city's international telecommunication system (Peter-Star, Baltic Communications, St. Petersburg International, Cable and Wireless, and St. Petersburg Telecom). Their services are also used in other areas (accounting, consulting, real estate, legal advice). On 5 March 1998, a trade delegation of 12 leading British companies in electronics, telecommunications and information technologies visited St. Petersburg.
British Airways has expanded its activity by increasing the frequency of its St. Petersburg-London-St. Petersburg flights to five times a week.
British Petroleum is a joint venture for the production and sale of lubricating oils. British Gas is improving the gas mains of the city, the Baltic Bottling plant produces non-alcoholic beverages, and Securicor provides security services.
The British division of the Shell Company intends to expand its network of filling stations in St. Petersburg and build shopping centres in St. Petersburg's outlying regions.
The Morrison Company opened a business centre in a reconstructed building on Isaakievskaya Square in September 1998.
British companies are participating in development and trade projects (Interfront, Cadbury), as well as in the pharmaceutical industry (Glaxwelcome, Skarus, Smithklein, and Beecham).
The Avesta Sheffield company, a branch of British Steel, opened a new warehouse at the Kirov plant in May 1997.
The Taylor Woodrow Company, a British division of the Scansca Company, and Gibb are taking active part in the construction of a transportation commercial complex at the Moscow Railway Station. The Gibb company is also participating in a tender for designing and constructing a North-South highway (west cross highway).
British companies are participating in developing a plan for reconstruction and development of a residential area and international yachting centre in Sestroretsk.
Since April 1997, the Baltic Bread by Wendy joint venture has been operating in the city. It was created jointly with the British company, Wendy, which supplied the Baltic Bread bakery with state-of-the-art equipment and opened its own shop.
Several British companies (Europe Russia, Cameron Bellons) have expressed their willingness to participate in the construction of the St. Petersburg 300th Anniversary Park on the shores of the Finnish Gulf.
The first English management company on the St. Petersburg hotel market was the Sir Rocco-Forte and Family Co., it owns 25% of the shares in the Astoria hotel.
Specialists from Great Britain are actively participating in EU technical assistance projects being implemented in St. Petersburg. The total cost of these projects amounts to almost 7 million ECU, and they include such spheres as wholesale and retail trade reorganisation, fruit and vegetable distribution, analysis of the bread and bread product manufacturing sector, transportation (including the sea port).
Within the framework of the European banking advice service TACIS-EU Programme, the St. Petersburg Association of Commercial Banks and the Association of British Bankers (which unites 300 banks from 60 countries) made an agreement on cooperation.
The British government Know-How Foundation is a programme of technical assistance to the countries of Central and Eastern Europe, the Baltic states, and former Soviet Union.
Between 1992 and 1998, the Foundation spent more than US million to finance projects in St. Petersburg. Since 1998, the Foundation has been funding President Yeltsin's programme of field training in Europe for 10,000 Russian managers (1,000 from St. Petersburg). The main projects carried out in St. Petersburg with the Foundation's assistance are as follows:
The proceeds were 50% more than expected, and another four just as successful issues followed between April and June 1995. The city revenues from these issues amounted to 700 million pound, and the mechanism used is currently being applied in Nizhny Novgorod, Moscow, and the Leningrad Region. The project continued until the end of 1998.