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SubscribeJohn Mark Pommersheim, Consul General of the United States of America in Vladivostok
May 29, 2007
"Joint projects between American business people and their colleagues in the Russian Far East are developing apace. A lot of the business contacts that were established in the early 1990s between Russian and American businesses in the region continue to function and bear fruit. While they may not necessarily receive much media coverage, they are indeed happening in a wide variety of areas"VLADIVOSTOK, vladivostoktimes.com
Mr. Pommersheim, could you please outline the business activity of American companies in the Russian Far East: which region, for example, has the highest concentration of U.S. businesses?
One of the main focuses of American investors in recent years has been Sakhalin Island. Development of Sakhalin's offshore energy deposits has generated a significant number of international oil and gas projects. When one visits Sakhalin, one encounters high level experts and professionals from many countries, including India, Japan, Ukraine, Moldova, the United States, Great Britain, just to name a few.
Last year the U.S. Ambassador to Russia and I had a chance to visit Sakhalin to view up close some of the ongoing projects in the Chayvo region, and they are quite impressive. The technical aspects of them are very challenging. However, it seems that projects are making good progress, and in some cases reaching peak production rates, such as the Sakhalin-1 project, which, I understand, in early February reached its production target level of 250 thousand barrels of oil per day.
U.S. companies continue to be long-term investors in Sakhalin energy projects. For example, one of the major operators of the $12 billion Sakhalin-1 project is the Houston-based U.S. energy firm, ExxonMobil. It should also be noted that U.S. companies are investing in other sectors of Sakhalin's economy as well, such as in shipping, port construction, and logistics.
Approximately 2,000 U.S. citizens currently reside and work on Sakhalin, and this number continues to grow, which is one of the reasons the U.S. government decided to open a Consular Agency on Sakhalin last year. We also have an American Corner in Yuzhno-Sakhalinsk that promotes people-to-people contacts through cultural and educational programs. Also, some large U.S. companies on Sakhalin, in tandem with the U.S. government, established a special microfinance program aimed at the development of the island's small and medium-size businesses. This program has had some notable successes.
Beside the business opportunities on Sakhalin, what sectors of Primorye's market are attractive to U.S. investors? And what is the current presence of U.S. businesses in Primorye, which we know has dramatically decreased since the late 1990s?
Over the last 5 years the trend has been fairly positive. After 1998, and the financial crisis in Russia, there was a considerable reduction in the number of American companies here. Now, however, the Russian economy is doing well; it is growing at about 7 % annually, and according to statistics, average wages have doubled in the last five years. All of these are very positive signs for American investors. That said, the Russian Far East still lags behind western Russia in attracting U.S. businesses. Companies like General Motors and Proctor & Gamble are very active in western Russia's much larger consumer markets. In certain areas, it is logical to assume that international companies could shift their focus eastward with time.
I often enjoy attending the meetings of the Vladivostok International Business Association, where I learn how Primorye companies are engaged in international business with American partners in a variety of fields: construction, software development, logistics, consumer products, etc. I should mention that American small and medium-size businesses are indeed interested in Primorye's market, and I have advocated Primorye's attractive features with a number of businesses from California and the U.S. West coast that export medical technologies and consumer goods such as California wines. Importing wine directly to the Russian Far East is an incredibly promising project that is beneficial not only to local wine importers, but also to local consumers who currently must pay a high price for the transport of California wines through western Russia.
Does the reputed lack of business transparency in Primorye pose an obstacle for American investors?
Well, business transparency is certainly still an issue. From time to time the situations related to business transparency arise. Over time, however, as local economies grow, I am hopeful that the situation will improve; it would definitely increase the attractiveness of the region. And yet, in spite of all the current challenges in this domain, joint business ventures are still developing. A lot of the contacts that were established in the early 1990s continue to function and bear fruit. While they may not necessarily receive much media coverage, they are indeed happening in a wide variety of areas, from leasing and mining, to the construction and waste management industries.
In your opinion, how can tentative plans for the construction of major oil refinery facilities, and development of Primorye in anticipation of Vladivostok's hosting the 2012 APEC Forum affect the local investment climate?
Obviously companies would likely be very interested in taking a look at participation in these types of major projects. Both of them definitely have the potential to raise awareness overseas of business opportunities in Primorye and open new opportunities for the region.
Throughout the Russian Far East, the U.S. Consulate General in Vladivostok is one of the most active diplomatic missions that promotes its national culture. In the past year alone, Russians around the region have had unique opportunities to meet, listen to and watch a significant number of American musicians, painters and film makers. What is next on your cultural agenda?
We would like to follow up on the success we had with the annual Jazz Festival last November in Vladivostok. We always try to attract U.S. musicians for the Jazz Festival and hope we will continue to do so. In addition, this summer we hope to bring a hip hop group to perform in the Russian Far East. Actually, 2007 is the 200th anniversary of the establishment of diplomatic relations between the United States and Russia, and we are planning a series of events to commemorate this important milestone, including several art exhibitions, and speaker programs where U.S. experts will address various interesting topics on youth leadership, electronic classrooms, etc. And there is another big event we are very exited about, scheduled for June. Together with the Far Eastern Branch of the Academy of Sciences we are planning to host an international conference on US-Russian Relations in the Asia-Pacific region, which will address the historical, economic, and security/political dimensions of our relations. We hope to attract a leading specialist of political science and economics from Princeton University to take part in this conference.
How do you manage to encourage all those prominent and busy people to come to Vladivostok? What is the motive for them?
I think one of our selling points is the name of "Vladivostok". In America Vladivostok has an aura of romance, being a port city in a very beautiful place. Actually, it is easy to get people exited about Vladivostok and invite them here. And while here, most of them really enjoy their stay; they meet warm interesting people, are impressed with the level of knowledge of students, and are interested to learn about the development of international ties. The only difficult point is the distance. We still do not have direct air links between the Russian Far East and the USA, though that may soon change. Currently a number of companies are looking into the possibility of restoring those links. I am sure that would bring benefit to both the development of culture and business.
The educational programs sponsored by the American government are very popular among Russian students and professionals. In recent years, have the numbers of selected applicants remained at the same level or been reduced?
I would say the overall numbers of the programs and selected applicants remain very robust. We continue to work on the exchange programs that we have got. Quite a significant number of Russians have had a chance to receive academic and professional training in America through programs supported by the U.S. government. This number is about 55,000 Russians over the last 11 years.
As is the case around the world at our diplomatic missions, some of the exchange programs are being reduced while others are expanding, like, for example, the Fulbright Program, which has increased funding for Russia by 30 percent. Besides, some new programs are coming up like one on entrepreneurship or on general aviation and small aircraft. I believe the last one might be particularly interesting for applicants residing in areas located far from the regional capitals. Also, there is a new exchange program for writers especially. We have been actively working with our partner organizations such as IREX and American Councils to encourage Russian students and professionals to study in the United States.
Such exchanges obviously improve the overall relationship between our countries. During my recent trip to Alaska, I was impressed to learn that the University of Alaska has more Russian undergraduate students than any other U.S. university. I think with time there will be more and more independent students going to the USA, which we can only encourage. I had a chance to go to Moscow as an exchange student; I had a great experience there that really changed my life. It was back in the era of perestroika, in 1985-1986. I studied Russian language and literature at Pushkin Institute, and that is one of the reasons why I recommend students to see other countries and experience other cultures.
The U.S. entry visa policy has some strict regulations. How often do you have to deny a visa application?
I think this is an old and incorrect stereotype about the U.S. visa process. Our approval rate is now quite high and the actual number of denials has gone down significantly. We try to provide good visa services as quickly as possible. We do welcome all kinds of visitors: students, businesspeople, government officials, seamen; and travel continues to increase year by year.
Of course there are certain requirements and one of them is that the applicant should demonstrate well established ties to their home country. Information from the Department of State that was recently made public shows that the refusal rate for Russians is approximately 15%; this in fact shows that the vast majority of tourist and business visas for Russians are approved.
How often do you go home and where in Russia do you prefer to spend your vacations and holidays?
Usually I try to go home twice a year. I am from Pittsburgh, but recently I visited a sister city of Vladivostok's: the city of Juneau in Alaska. There I met many of my compatriots who have been engaged in business and different joint projects with Russia for many years. They know many of the same Russian people who I know, so we were sharing stories and discussing how we could build stronger relations with the Russian Far East.
Frankly, I very much like the beauty of the Far Eastern nature. For example, over this New Year holiday, my family and I enjoyed going to Arsenyev to ski. Well, we did not have as much snow as we would have liked, but we had enough to do some nice downhill and cross country skiing. This is one of our favorite places to go in Primorye. In general, Primorye has excellent potential for eco-tourism, but in order for it to flourish and take off, there has to be world class infrastructure to support it. In my opinion, Primorye and Kamchatka are perhaps the most promising areas in this area, with very rare nature and beautiful coastlines. By developing these resources correctly and taking care of the environment, the Russian Far East will increase the flow of international tourists.
By Anastasia Petrova.
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This article was originally published by Vladivostok Times.