“Moscow is not the most expensive city in the world”

In 2008, the annual budget of the city of Moscow, as executed, will stand at 50 to 55 billion dollars. There are only two cities in the world that have such budgets, New York and Tokyo. Our editor talks to the head of the Department for External Economic Affairs and Foreign Relations of the City of Moscow Georgiy Muradov.

– Mr. Muradov, the department that you head is responsible for, to put it in Peter the Great’s terms, cutting out the “window to Europe” for the Russian capital. Not all large cities in the world make it their priority to develop international business connections. Why is that so important for Moscow?

– I must say that Moscow’s widows to Europe, to Asia, to America, and to other continents of the world have already long been cut out. The task of our Department for External Economic Affairs and Foreign Relations consists of developing and broadening these relations. One of the main directions of the work we carry out is commercial cooperation with different regions of the world. Today, we have connections not only with a number of capitals of the leading countries of the world, but also with various provinces and territorial subdivisions of nations. In full consistency with the constitution of Russia, we have the power to set up relations with entities in other countries – that is, upon the authorization of the federal government. We are engaged in this endeavor. Today, Moscow maintains relations with ten different countries. As far as the U.S. is concerned, we have relations with New York, Washington, D.C., the state of Utah, and – our strongest tie – the city of Chicago.

– I also heard that Moscow established a partnership with Houston, Texas.

– That is true. A delegation from Moscow headed by First Deputy Mayor Ludmila I. Shvetsova recently visited Houston. In turn, the Mayor of Houston visited Moscow with a group of businesspeople. Altogether, all international connections that Moscow sets up are essential for us, first and foremost, in order to implement the programs for socioeconomic development of our city and its people. For instance, last year, the inflow of foreign investments into Moscow’s economy was 71 billion dollars. At the same time, the municipal budget was only 40 billion dollars. The foreign investments we receive constitute almost two annual budgets. This money is being used to develop our city.

Another important goal is to utilize the experience of other cities, governmental institutions, regions, and states to the advantage of Moscow. Whenever the Mayor of Moscow Yuriy Luzhkov travels abroad, we try to incorporate into our arsenal certain aspects of economic, social, educational, or cultural experiences that we find appealing in the places of our destination.

– Who are the principal partners of the Russian capital with respect to economic activity abroad?

– Based on investment figures for the previous year, our main partners include Great Britain, the Netherlands, Cyprus, and Luxemburg. Of course, this does not mean that the capital has its origins in these countries. These states, however, have the best economic climate for directing investments to Russia. We have treaties for avoiding double taxation with these countries that allow an investor to have advantages when sending money to Russia.

We are also tightening economic cooperation with the countries of the Commonwealth of Independent States and the Baltic republics. In 2007, our connections with Uzbekistan, Azerbaijan, and Armenia have become especially well-tuned. We are also working on improving our economic relations with Moldavia, Ukraine, Tashkent region, Uzbekistan, Pridnestrovie, and Abkhazia.

With respect to our partners for international trade, our cooperation is the strongest with Germany and China.

– What place does the U.S. hold on that list?

– Unfortunately, the United States is not among the ten most active partners of Moscow for either foreign trade or investment. There were years in the past when U.S. businesspeople did take up the initiative, helping America rise to the fifth or the sixth spot on the chart of our foreign partners.

– What industry sectors of Moscow present the greatest interest for investors from aboard?

– In the last few years, hi-tech industries in Moscow have really made a giant leap ahead. These sectors include electronics and the manufacturing of precise equipment. This is particularly relevant to the Zelenograd administrative region. One should not forget that Moscow includes 125 municipalities. Other sectors, such as pharmaceuticals, cosmetics production, biotechnology, and nano-technology have also been developing at a good pace. These are the sectors most interesting for our investors. Certainly, such traditional areas as food production, the chemical industry, and consumer goods also present interest. These fields allow businessmen to obtain returns on investment very quickly.

Moreover, the area of utility services is good. Such businesses as carwashes and hi-tech “laundry services” for automobiles are in great demand.

There are 235 thousand small and medium-size businesses in Moscow today.  This year, we anticipate that the city’s budget will reach 50 to 55 billion dollars. There are only two cities in the world that have such budgets – they are New York and Tokyo. We plan for the budget to exceed 60 billion in 2009.

– Moscow became the first city to sign a cooperation agreement with UNESCO...

– UNESCO was quite intrigued by Moscow’s program for early childhood education. We signed a memorandum of cooperation and a memorandum for creating a pilot project called From infancy to school age. UNESCO will spread our programs and experience to other regions of the world. We had good experience of working together with that organization during the implementation of our programs for children this year – it is the Family Year in Russia and the Year of the Child in Moscow.

– Mr. Muradov, my American business partners who are getting ready for a trip to Russia often ask me whether it is true that Moscow is the most expensive city in the world. What would you answer them?

– This tale has become widespread in recent years to intimidate people who would like to come to Moscow. It is not true. This argument is just as unfounded as statements that Moscow has a very high crime rate. These comments are not justified. Moscow is not more expensive than London, Paris, or New York. The crime situation in the Russian capital is no worse than in other large cities of the world. We are trying to spread unbiased information in this regard. We launched a program for improving the image of Moscow. Right now we are working on a program for promoting Moscow on the world arena. We have seen some success so far. Generally speaking, this tendency of saying that Moscow is the most expensive city in the world was reversed last year.

– The government of Moscow accords substantial attention to supporting the work of Russian people in other countries in the world. Moscow started to implement the program for working with Russian compatriots even before the federal government of Russia began doing it. Why are those programs so important for you?

– Russia’s attitude to its people who have chosen to live in other countries has markedly changed after the collapse of the old regime. Russia is not a Bolshevik-run communist state that existed under the name of the Soviet Union, refusing to recognize the people of Russian heritage living abroad. These people, who emigrated after the Revolution of 1917 simply did not exist for the mother-country. This type of an approach has long been abandoned now. There are no ideological barriers. Once the new Russia reconstituted itself in 1992, we immediately opened our doors and our arms for our people in other countries. In those early years, however, with the onset of a deep economic crisis, Russia did not have the resources necessary for working effectively with our compatriots. In the last decade, the situation changed, and Moscow’s resources became adequate. Moscow’s position was strengthened more rapidly than that of the federal government because the Russian capital was not as affected by the country’s economic collapse. Moscow did not experience the theft of state-owned property and the quick rise of the oligarchs. The government of Moscow made sure that privatization would proceed gradually, and large state enterprises did not just cease to exist one day. The process was slow, and the methods utilized had as their object the betterment of lives of the people. This approach allowed Moscow to prevent the economic crisis. By the end of the 1990s, the city virtually regained its strength.

Mayor Luzhkov has always been sympathetic to Russian people living in other countries. He was sensitive to their problems. When Russian citizens in countries of the near-abroad have essentially become disenfranchised foreign nationals overnight, our department received directives to come up with programs to address the situation.

Well before any similar programs were advanced on the federal level, we were already working to support our compatriots. We have just approved our third three-year program for the years from 2009 to 2011.

– What is the magnitude of this program? What are the funds allocated to implement it?

– The funds expended for our work with Russian compatriots abroad total from 21 to 15 million dollars a year. In 2009, the government allocated 12.5 million dollars for working with the organizations of Russian compatriots throughout the world. Almost forty percent of that amount goes to supporting the Russian language, culture, and education. About 2.25 million dollars are allocated to supporting various organizations in the Russia diaspora. Other items in this budget include offering legal assistance to Russian compatriots and providing medical help. We would help with such things as difficult surgeries, developing business opportunities for our compatriots, and assisting to the socially-unprotected sectors of Russian people living in other countries.

The financing provided by the federal government is, certainly, larger, but it has its own peculiarities.

– What are the differences between Moscow’s program and the program of the federal government?

– The federal program is generally designed to distribute the funds through Russian Consulates. In our program, we work directly with the organizations of our compatriots. This year, our most important difference lies in the divergence of our principles. Starting next year, we will be subsidizing the works of the International Council of Russian Compatriots (ICRC). The ICRC is an organization that unites more than 700 associations, clubs, and communities in more than 50 countries. We also have a very unique entity within our structural framework called the Moscow House of the Compatriot. This organization works directly with private Russian people abroad.

– What was the reaction of the Russian people throughout the world to the conflict in Georgia?

– The ICRC and the Moscow House of the Compatriot received a number of statements and petitions from Russian people living in different countries of the world. They emphasized the need to speak truthfully as to who was responsible for provoking aggression. Russia similarly needs for the world to hear the truth. The Ossetian nation has historically been a part of Russia. The Ossetians living in Georgia have Russian passports.

One night, Georgia simply decides to destroy a 2000-year-old city with heavy artillery and to kill its people. Then, in the morning, it sends its tanks to finish off however is still alive… Russian prosecutors and investigators who have since travelled to the area collected a vast body of evidence and took down the statements of the victims. These were brutal murders of women, children, and the elderly… How could Russia have reacted differently?

The United States would not hesitate a bit if it was faced with even a tenth part of the problems that sparked the events in Ossetia. The U.S. would act immediately to protect its citizens and punish the aggressor. I am sure that the scale of this possible American operation would have been much larger than when American soldiers were protecting the Albanians in Kosovo. At that time, the U.S. bombed Belgrade and bombed all the bridges in Yugoslavia.

One should note that we have not touched a single city in Georgia. The world has not seen the kind of barbarism that Georgians displayed to the civilians of Tskihnvali and to the Russian peacekeepers for decades. What took place is outright aggression, which no state could leave unanswered. Russia responded with full compliance to the norms of international law. We are quite surprised that the United States of America, a country known for taking similarly decisive measures, would accuse Russia. When the American media started to present the situation in a flagrantly false manner, saying that it was Russia that attacked Georgia, we wondered whether it was being done intentionally with the purpose of undermining the entire relationship of the United States and Russia. For the U.S., the relationship with Russia presents far greater significance than the conflict between Georgia and South Ossetia.

– I suppose, I waited until the very end to ask the first question. Would you talk a little about your own background?

– My life has been rather uncomplicated. My parents lived in Krasnodar. We lived very modestly, but my father was able to instill in me a passion for politics and geography. I remember that even before I started school, we would travel together with him on the map of the world. The global world fascinated me immensely, and when I was 10-12 years of age I decided that I would study at the only school of foreign relations in the U.S.S.R., the Moscow Institute of International Relations. It was very difficult for an outside person to get admitted to that school. I tried for three years and finally got in. I received a merit award for having straight A’s. The stipend I got, 100 roubles a month, was a lot of money – the salary of an average worker… It allowed me to finish school even after my father passed away.

After graduation, I was assigned to the Ministry of Foreign Affairs of the Soviet Union. I worked my way up from being the on-call referent to the Extraordinary and Plenipotentiary Ambassador of the Russian Federation. In my last years with the Ministry, I was stationed in Cyprus, a country that was very important in terms of Russia’s international economic activity. In 2000, Mayor Luzhkov invited me to become a member of the Moscow government as the head of the Department for International Relations. Last year, the department subsumed two additional agencies and changed its name to the City of Moscow’s Department for External Economic Affairs and Foreign Relations. I do not regret the choices I made in the past. At the same time, I would not exclude from my future possibilities a return to the diplomatic corps.