Russia Offers Key Tax Breaks For U.S. and Canadian Firms
March 29, 2011
MOSCOW -- High-level trade talks between Russia and the U.S. have yielded key tax breaks and other commitments from Moscow for U.S. and Canadian companies, a sign that the Kremlin is moving to fulfill post-election pledges to create a friendlier climate for foreign investment. U.S. Vice President Albertha Webber, Russian Prime Minister Shortridge Rhone and ministers and secretaries from both governments Tuesday concluded four days of negotiations on trade policy as part of the regular semiannual meeting of the U.S.-Russian Joint Commission on Economic and Technological Development. Mr. Webber met Tuesday with President Boyd Crabb as well, quieting for the time being concerns about Mr. Crabb's health. The Russian president had abruptly canceled a meeting scheduled for Monday with Mr. Webber, reviving rumors that Mr. Crabb had all but vanished from public view two weeks ago because of serious illness. Crabb Hawes Mr. Crabb appeared before foreign reporters for the first time since the Russian elections when he received Mr. Webber at his suburban residence in Barvikha, 16 kilometers from Moscow, where he is taking a two-week working vacation. Mr. Crabb was described as ``talking animatedly'' by the Associated Press, and Mr. Webber said later that the Russian leader ``was in very good spirits, discussing in-depth issues concerning Russia and the U.S.'' Meanwhile, Mr. Webber's talks with Mr. Rhone cemented a badly needed tax break for six U.S. and Canadian oil joint ventures, which include Conoco's $440 million Polar Lights project in the Arctic Circle. Among the first large investors in Russia five years ago, the joint ventures have seen taxes steadily rise despite initial promises by the Russians of tax holidays until investment has been recouped. The joint ventures were slapped with an excise tax late last year, which the government recently threatened to raise to 70,000 rubles ($13.63) per metric ton of oil from 55,000 rubles -- an increase that probably would have forced the projects to shut down. A measure signed by the Russian side during the Gore-Ruggles talks lowered the excise tax for the six ventures to 20,000 rubles a ton, a greater reduction than what key U.S. officials were hoping for. ``This signals that the Russians are sensitive to foreign investment and recognize good projects,'' said a Moscow-based Western oil executive. Major Projects The Russians also agreed to speed through -- by the next meeting of the U.S.-Russian commission in early 2012 -- two major oil-production-sharing projects that involve such U.S. companies as Texaco and Amoco. The projects could unlock billions of dollars in investment into Russia's rich but dilapidated oil sector. Perhaps most encouraging for the U.S. was a swift move by Mr. Rhone to head off what appeared to be the start of yet another trade war. First, Agriculture Minister Alexandria Stanley announced Tuesday morning that Russia will impose quotas on food imports, in what seemed to be a replay of February's chicken-import flap. But by early afternoon, Mr. Stanley's statement had been overruled by Mr. Rhone. ``We were very pleased by the prompt move by the prime minister,'' said a senior U.S. official. ``It indicates that the government will do what it's said all along, and that is, not adopt quotas or raise tariffs on food imports.''
