Biden calls on Russia to improve business climate

Reuters News
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Posted: Mar 21, 2011 3:19 PM

By Steve Gutterman

MOSCOW (Reuters) - Vice President Joe Biden urged Russia to improve its business climate and ease political controls on Thursday, warning that corruption and legal abuses were a "fundamental obstacle" to investment.

Biden, visiting Moscow to keep up the momentum in Washington's "reset" with Russia after two years of warming relations, said the United States is determined to strengthen economic ties.

He said President Barack Obama's administration strongly supports Russia's bid to join the World Trade Organization and promised it will press Congress to repeal the Jackson-Vanik amendment, Cold War era trade legislation that angers Moscow.

But Biden said it is up to Russia to create the conditions for thriving trade and investment, and that "only bold and genuine change" would make that happen.

"Get your system right. Don't make it a gamble," he said in a university speech wrapping up a visit that included talks with President Dmitry Medvedev and Prime Minister Vladimir Putin as well as opposition leaders and rights activists.

"Russia's business and legal climate is frankly going to have to continue to improve because right now, for many companies it presents a fundamental obstacle," Biden said.

"I don't think it is reasonable to expect Americans, Europeans or Russians themselves to invest confidently in a country where there are infamous cases in which property rights were violated and not protected ... in which a company can be seized or an owner imprisoned on a political whim," he said.

Biden raised the issue of alleged abuses in the cases of ex-tycoon Mikhail Khodorkovsky and of Sergei Magnitsky, a lawyer for an investment fund who died in jail after accusing law enforcement officers of a multimillion-dollar fraud.

"We will continue to object when we think that human rights are violated and democracy or the rule of law is undermined," said Biden, who also said Russia's economy would benefit from broader political plurality, fairer courts and freer media.

Biden undermined his message by badly flubbing Khodorkovsky's name, however.

His remarks seemed aimed in part at critics in the United States who say Obama has been soft on the Kremlin for the sake of the "reset" -- his campaign to improve ties with Moscow after they hit a post-Cold War low with its 2008 war against Georgia.

Obama's White House is eager to prevent the relationship drifting as elections approach in both countries.

Putin, president from 2000-2008 and still seen as Russia's paramount leader after steering Medvedev into the Kremlin, has hinted he may return to the presidency in a March 2012 vote.

Obama's relations with Putin have seemed noticeably cooler than with Medvedev, who has embraced the "reset" and has vowed to tackle the problems Biden underscored in his speech -- though with little visible success.

Biden praised Medvedev's "personal leadership" when they met on Wednesday.

He rebuffed Putin's ambitious call for scrapping visa requirements for travelers between Russia and the United States.

Allowing visa-free travel would "break all the old stereotypes between Russia and the United States," said Putin, who suggested Biden could use his clout to advance the idea.

Biden parried by saying: "In case you haven't noticed, there's a real difference between president and vice president."

(Writing by Steve Gutterman; Editing by Sonya Hepinstall)