The Moscow Kremlin – Photo by Swann Bigot, April 2015.
The French Minister of Economy and Finance Michel Sapin was in Moscow on December 1-2 to reaffirm the France’s commitment to strengthening economic, industrial and trade relations with Russia. Michel Sapin met with Russian officials and had the opportunity to exchange views with representatives of the French business community and to evoke the future of the European Union after the Brexit.1
The French Minister of Economy and Finance met on December 1, 2016 with head of the Russian Central Bank Elvira Nabiullina to discuss economic and financial situation in Russia and cooperation between the two countries.(2) After this meeting Michel Sapin told Russian journalists about the economic opportunities in France.
Then Michel Sapin had a meeting with representatives of the French business community in Russia and gave a lecture on the future of Europe after Brexit in the French College of the Lomonosov Moscow State University.(3)
On Friday morning, the French Minister visited the Renault factory in Moscow, founded in 2004. The plant has a production capacity of 160,000 vehicles per year and builds five vehicles : Logan, Sandero, Fluence, Mégane and Duster. Renault Russia is 94.1% owned by Renault and 5.9% by Moscow City Hall.
Michel Sapin then met with the Russian Finance Minister Anton Siluanov.(4) According to the press agency TASS, they have discussed a wide range of issues, including the G20 agenda, the cooperation in the framework of BEPS Plan (Base Erosion and Profit Shifting, G20 and OECD action plan to combat the erosion of the tax base and output gains ), as well as customs cooperation and the alcohol market.
The French Minister also held meetings with the Russian Minister of Industry and Trade Denis Manturov and the Russian Deputy Prime Minister Arkadi Dvorkovitch.
The French official said that he would be pleased to meet in the future with the new Russian Minister of Economic Development Maxim Oreshkin appointed on November 30.(5)
In an interview with the special correspondent of “Interfax” Daria Morozova, Michel Sapin spoke about the French-Russian economic relations and their prospects for 2017 as well as about interests of French investors in the Russian market.(6)
The continuation of the political dialogue between Moscow and Paris
Michel Sapin said that the first objective of this visit was the continuation of an intense political dialogue between France and Russia, despite of the differences on specific topics, such as Ukraine or Syria. Michel Sapin has stressed the importance of the bilateral cooperation and joint work to overcome differences.
He added : « Sanctions are not an end in itself but a political tool, the President of the French Republic has repeated this many times. Their lifting depends on the implementation of the Minsk agreements by Ukraine and Russia. This position is supported unanimously by the European Union members. »(7)
The French official remains convinced that « Europeans should not limit their relationship with Russia only because of different views of the Ukraine crisis and even if they are determined to be demanding in their approach, as well as Russia in its, they seek a resumption of dialogue and in-depth cooperation in all spheres (economy, energy, human rights, security). »
« In 2017 Europe will remain the main economic partner of Russia. The EU accounts for about 50% of Russia’s foreign trade and 75% of its foreign direct investment » said Michel Sapin.
An intense economic cooperation
The second objective of the visit was the preparation of the French-Russian Council for Economic, Financial, Industrial and Trade Issues, (CEFIC) a platform for dialogue. The resumption of meetings of this critical platform in January 2016 shows how important are French economic contacts with Russia, and that France believes in the future of the Russian economy, in spite of the crisis according to Michel Sapin. He said that he will attend the next CEFIC meeting in Paris in early 2017.
Since 2014 the bilateral trade relations have been hit by the international sanctions against Russia following the Crimea’s crisis and retaliatory measures taken by Moscow against Western food products.(8)
An economic recession in Russia in 2015, a sharp fall of oil prices and of the Russian ruble have maintained pressure on French- Russian trade and economic relations.
French Minister told journalists that the state of the bilateral relations in 2017 will depend on the possibility of economic recovery in Russia and on changes in oil prices, which are hard to predict.(9) An economic growth in Russia will allow France to find new opportunities according to Michel Sapin. He added that France is open to Russian investments.
According to the Central Bank of Russia, in 2015 as in 2014, France was the leading supplier of Russia in foreign direct investments flows with $1.6 billion.(11)
The French Minister of Economy does not see any reasons why the French investors would be reluctant to buy Russian assets : « The Russian economy is the 9th market in the world with 143 million people, where there are various possibilities, including the creation of new markets. The current economic crisis in Russia is temporary. Russia is a large developing country, which means that in the medium-term economic growth rates will be higher than in most advanced countries. »
Michel Sapin stressed that transparent, fair and opened sales of Russian assets will attract French investors. A recent example is the announced participation of Renault in the capital increase of Avtovaz. Renault will invest more than €350 million. This move could increase its effective share from 37% to 70% of Avtovaz.(12)
The management of the French carmaker Renault believes that the Russian market has good prospects in the long-term and expects profit recovery in 2018. (13)
From January 2014 till March 2016, Nicolas Maure has led the car maker Dacia SA in Romania, wholly owned by Renault.(15)
French companies are also present in the $27 billion Yamal LNG project. The shareholders of the « Yamal LNG » joint venture are Novatek (50.1%), French Total (20 %), Chinese CNPC (20%) and Silk Road Fund (9.9%). This is the most important project of the French-Russian cooperation. The LNG plant in construction will produce around 16,5 million tons of LNG each year. The production will begin next year and the first export by sea shipping will take place by the end of 2017.
The French Minister of Economy told the journalist of Interfax press agency that he has personally agreed in principle that French export credit agency COFACE takes part in financing this project in order to support export contracts of many French companies (Total, Technip, Vinci Entrepose / TMSI).
Michel Sapin expressed the interest France towards industrial partnership between Russian and French companies. The coming months will show how the economic bilateral relations will evolve.
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1« Министр экономики Франции посетит Москву 1-2 декабря », РИА Новости, 30/11/2016 : https://ria.ru/economy/20161130/1482524137.html ; Claude Leguilloux « Déplacement de Michel Sapin à Moscou », Boursier.com, 30/11/2016 : http://www.boursier.com/actualites/news/deplacement-de-michel-sapin-a-moscou-708460.html?fil62 ;
3« Déplacement de Michel SAPIN, ministre de l’Economie et des Finances à Moscou », Note aux rédactions, Ministère de l’économie et des finances, Paris, 30/11/2016 : http://proxy-pubminefi.diffusion.finances.gouv.fr/pub/document/18/21792.pdf ;
10 World Bank. November 2016. The Russian economy inches forward : will that suffice to turn the tide?. Russia economic report no; 36. Washington, D.C. : World Bank Group : http://documents.worldbank.org/curated/en/424231478762595715/The-Russian-economy-inches-forward-will-that-suffice-to-turn-the-tide ;
12 Vladimir Shtanov, « Renault Plans Potential $386M Investment in Russian Car Manufacturer AvtoVAZ », The Moscow Times, September 5, 2016 : https://themoscowtimes.com/articles/renault-plans-potential-386m-investment-in-russian-car-manufacturer-avtovaz-55210 ;
14 Peter Campbell, « Renault and Nissan choose Nicolas Maure to lead Russia’s AvtoVAZ », Financial Times, March 15, 2016 : https://www.ft.com/content/5fd2d1ac-ea96-11e5-888e-2eadd5fbc4a4 ;
15 Jason Show, « Renault, Nissan Name Nicolas Maure as New CEO at Russia’s AvtoVAZ », The Wall Street Journal, March 15, 2016 : http://www.wsj.com/articles/renault-nissan-name-nicolas-maure-as-new-ceo-at-russias-avtovaz-1458039592 ;