Putin reveals Canadian deals
By SHAWN McCARTHY
Thursday, February 14, 2002
Moscow — Russian President Vladimir Putin upstaged Prime Minister Jean Chrétien yesterday, announcing a day early that Canadian firms will sign contracts and announce potential deals today worth up to a total of $1-billion.
In a joint news conference, Mr. Putin and Mr. Chrétien sought to allay the concerns about Russia as a wild, unsafe place for Westerners to do business.
The Prime Minister rejected a suggestion from one disillusioned Canadian executive that bringing 300 business people to Moscow on a trade and investment mission was akin to leading sheep to slaughter.
"I saw no Canadian businessmen who believed they were like sheep coming here," he said.
Mr. Putin said many Canadian companies have been operating profitably here for years, and he pointed to the agreements to be signed today as further evidence.
The announcements — many of them merely agreements to negotiate deals — are to be unveiled at a signing ceremony today at the Luzhniki sports complex, the Moscow venue for the 1972 Canada-Russia hockey series.
Among the contracts is a deal worth up to $60-million for BCP Wheelabrator, a Burlington, Ont.-based firm, to sell sand-blasting equipment to the Russian Ministry of Railways.
Canadian officials said Mr. Putin's $1-billion figure was an "optimistic" assessment, but refused to give further details until the official announcement.
Mr. Putin and Mr. Chrétien were asked about a comment from Alex Rotzang of Calgary-based Norex Petroleum Ltd., who said the Canadian government's effort to bring companies to Russia is misguided.
The Russian President acknowledged that Canadian politicians and business people have some concerns about the safety of investments. Mr. Chrétien and the premiers, particularly Ontario's Mike Harris, expressed some of those concerns at a meeting with Mr. Putin and other leading Russian politicians.
But Mr. Putin listed several examples of Canadian firms succeeding in Russia, including Montreal-based Pratt & Whitney, a maker of helicopter engines, and engineering firm SNC-Lavalin, also of Montreal.
"I can assure you that if there were only losses and nothing but losses, I would have nothing to tell you today," he said.
The Russian President told his Canadian guests that his government had passed legislation reforming taxation, labour laws, the judicial system and the government red tape. And he promised more liberalization.
Although his own officials have acknowledged that serious problems persist, Mr. Chrétien played down concerns about the "wild west" reputation of the business climate here.
"When you are a businessman, you always take risk. And some businessmen lose money in Canada or the United States or Great Britain. And some lose business too in Russia," the Prime Minister said.
"But there are some good stories to be told. Money was lost in the past and it is normal."
Mr. Chrétien said the Canadian companies on the trip are optimistic about prospects here.
"My view is there is a lot of potential. Other nations are doing business here. We're lagging and I came to catch up."
But in an interview from London yesterday, Mr. Rotzang blasted Mr. Chrétien for taking a cavalier attitude toward the problems of his oil field company and others that have had investments seized by Russian companies.
"That's preposterous. He doesn't know what he's talking about," Mr. Rotzang said when told of Mr. Chrétien's comments.
"It's absolutely not normal when somebody comes and robs you with a gun. We are not afraid of commercial risk, but this is entirely different."
Calgary-based Norex had owned a majority of the Yugraneft oil company since its creation in 1991, and it was reaping about $65-million (U.S.) in annual revenue from its oil field after investing more than $50-million to upgrade the decaying property.
But then its minority partner was purchased by Tyumen Oil Co., one of Russia's biggest oil companies. Tyumen held a shareholders' meeting without Norex's participation, obtained a local court order to suspend Norex's share in Yugraneft, and then sent in a squad of gun-wielding security guards to seize the company.
Canadian officials have said the visit is more geared toward expanding trade links between the northern neighbours than increasing Canadian investment here.
Mr. Rotzang agreed that exporters don't face the same pitfalls that bedevil investors.
"Selling is okay," he said, "as long as you get paid up front."
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