Putting Russia on the right path

Mark III Photonics / Shutterstock.com

Vladimir Putin during a work visit, in the club Cabinet of Ministers, October 27, 2010 in Kyiv, Ukraine.

Article Highlights

  • There’s much more the United States can and must do to help put Russia on the right track.

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  • The time has come for U.S. and European leaders to join together to press Russia to respect the rights of foreign investors.

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  • I still believe that granting permanent normal trade relations to Russia was the right decision.

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I was relieved to learn Wednesday that President Barack Obama canceled a planned summit meeting with Vladimir Putin. It was the right thing to do, given the Russian president’s recent bad behavior. But there’s much more the United States can and must do to help put Russia on the right track.

The European Court of Human Rights recently ordered the Russian government to pay damages for violating the rights of former Yukos Oil Co. CEO Mikhail Khodorkovsky, who has been languishing in jail ever since the state took over his company a decade ago. Russia’s expropriation of Yukos and Putin’s escalating crackdown on political opponents continue to have repercussions not just for Khodorkovsky and his fellow Russians, but for thousands of foreign investors — including many Americans — who were caught in the crossfire between Khodorkovsky and the Kremlin. My Senate colleagues and I addressed this problem last year in legislation that grants Russia permanent normal trade relations with the United States. We hoped that the Obama administration would use the bill to work with Russia on a robust rule of law agenda.

Our legislation, known as the Russia and Moldova Jackson-Vanik Repeal and Sergei Magnitsky Rule of Law Accountability Act of 2012, included important human rights protections for Russians and a detailed agenda for improving protections for American investors in Russia. This includes strengthening protections for investors through negotiating a new bilateral investment treaty, pressing Russia to implement fully the OECD Anti-Bribery Convention, and promoting the claims of U.S. investors in Yukos Oil Co., whom my firm, Covington & Burling, represents. The law also requires the administration to report on the results achieved in promoting the rule of law in Russia.

It is important that the U.S. government demonstrates that it will not stand for the arbitrary and unfair treatment of its own citizens and companies by the Russian regime.

Despite Russia’s disrespect for the rule of law, there is an opportunity for the U.S. to join Europeans and work with Russia on a reformist agenda to improve its climate for trade and investment. Putin himself has urged foreign investors to invest in Russia and acknowledged that Russia needs to tackle its corruption problem. But now, Putin needs to know that investment will not flow in significant amounts until investors have confidence that Russia will treat foreign investors fairly and make good on its commitments under international law.

Russia has an opportunity to show it understands when it hosts the G-20 Leaders’ Summit in St. Petersburg in September. Improving the climate for foreign investment and combatting corruption are central parts of the agenda. U.S. and European leaders should insist that Russia take concrete steps to improve the rule of law environment for business in Russia. A necessary first step would be to compensate fully U.S. and European investors who lost billions in the Yukos takeover. Compensating investors in Yukos would send the message that Putin is serious about encouraging foreign investment in Russia and willing to make the reforms necessary to make it happen.

I still believe that granting permanent normal trade relations to Russia was the right decision. Increased trade and cross-border investment is in all of our interests. But my Senate colleagues and I made clear that free trade and investment require respect for the rule of law and the rights of investors. We expected and required Obama to step up and press for the reforms that are necessary to make trade and investment work in Russia.

I am sorry to say that the administration so far has not been up to the task. The European Court of Human Rights is holding Russia accountable for violations of Khodorkovsky’s rights. The time has come for U.S. and European leaders to join together to press Russia to respect the rights of foreign investors as well, starting by compensating foreign investors in Yukos.

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About the Author

 

Jon
Kyl
  • An attorney by training, Jon Kyl served 18 years in the US Senate after serving for eight years in the US House of Representatives. He was elected unanimously by his colleagues in 2008 to serve as Republican whip, the second-highest position in the Senate Republican leadership, a position he held until his retirement in 2013.
     
    As a member of the Senate Judiciary Committee, he helped write reforms to US patent law and the landmark Crime Victims’ Rights Act, as well as important provisions of the Patriot Act, the Military Commissions Act, and other antiterrorism laws.
     
    As a member of the Senate Finance Committee, he was a chief advocate of pro-growth tax policies, including low tax rates on income, capital gains, dividends, and estates. He was a member of the Joint Select Committee on Deficit Reduction, the so-called “Super Committee.”
     
    At AEI, Senator Kyl will join former Senator Joseph Lieberman to lead the American Internationalism Project, an important new effort from AEI's Marilyn Ware Center for Security Studies. The project's focus will be to rebuild and reshape a bipartisan consensus around American global leadership and engagement.

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