The Time Has Come to Take a Closer Look at Each Other
Much could still be done to strengthen Russia’s ties with Latin America. Indeed, despite the fact that mutual trade has more than doubled over the last 10 years and now exceeds $19 billion, the current volume of gross trade accounts for just a tiny fraction of Russia’s international trade.
Where are we now?
There is no doubting the fact that over the next few years, Latin American markets will become immensely appealing to Russian businesses. Currently, experts estimate that potential investments could exceed $25 billion. In addition, all the prerequisites to expand cooperation across a range of sectors are already in place. Earmarked industries include energy, automotive, aviation, geological exploration, medicine, and IT, amongst others.
EXIAR’s project portfolio reflects these mutual trade interests. Over a relatively short period of time, the agency has signed 25 insurance agreements for Russian shipments to Venezuela, Colombia, Cuba, Mexico, and Peru worth a total of over $100 million. Inter RAO, Zarubezhtsvetmet, RUSELPROM Trading House, and Ivekta are just some of the Russian exporters to have benefited from the agency’s support. The agency has completed a number of major projects, including insuring deliveries of Sukhoi Superjet 100 aircraft to Mexico.
There are currently 41 projects worth a total of approximately $2.3 billion in the works. These will involve insuring shipments of power engineering products, chemicals, radio electronics, and electrical goods, as well as aviation and automotive equipment to Argentina, Uruguay, Brazil, Peru, Ecuador, Guatemala, and Chile.
What needs to be done?
A successful trade partnership is always founded on competitive strengths and information. Russia has not always been able to sufficiently coordinate efforts to enter new markets and gain a foothold in them. Of course, business missions, forums, and conferences do go some way towards successfully establishing entrepreneurial partnerships. However, a more comprehensive approach requires more to be done in terms of providing up-to-date information on invitations to tender, as well as an efficient communication policy regarding the benefits of the regional customs, tax, and political regimes.
The Instituto Bering-Bellingshausen para las Américas (IBBA) was recently established in Montevideo. One of its objectives is to facilitate access to Latin American markets for Russian companies. A major assembly and conference is scheduled to take place in the city this July. We are greatly looking forward to seeing the results of this endeavor.
The ability to offer a competitive proposal is equally important when it comes to strengthening trade and economic relations – specifically, a comprehensive package to provide financing and cover risks. This will allow every partner in a transaction – be they the buyer, seller, or bank – to feel at ease.
Insurance is one such component of this package. We, like our colleagues from national export credit agencies in other countries, provide protection against commercial and political risks. In fact, international projects with other export credit agencies account for over 10% of EXIAR’s total insurance operations. In these scenarios, a Russian organization is insured by our agency, while their partner is insured by the agency of their respective country. This way, all the risks related to a particular project are covered.
For the first time this year, the St. Petersburg International Economic Forum featured a session dedicated to boosting cooperation between Russia and Latin America. This will soon be followed by government-level discussions. I do not doubt that we will soon be taking a major step forward in our relations. All that is required is that we take a closer look at each other.
Petr Fradkov is CEO at EXIAR. He participated in the St. Petersburg International Economic Forum 2014.
