Russia in Mexico

MEXICONOW Staff Report

Russia and Mexico have more than one hundred twenty years of diplomatic relations and in the last decade economic results have grown in commercial operations, business projects, institutional cooperation and relations between the two countries.

When world politics are discussed in a context of Russian-Mexican relations the focus of attention is usually on themes related to the enhancement of the role of the UN in the maintenance of global peace, international security and stability, and ways the Organization and its Security Council can be reformed. Both Foreign Ministries regularly exchange views on major world trends, including through the prism of emerging global challenges and threats.

Russia is present in Mexico with chemicals, energy and metallurgical equipment, helicopters and military ammunition. Many Mexicans receive electricity generated by hydroelectric dams built by the Russian company “Silovye Machini”. Thousands of acres of Mexican land have been enriched with Russian-made fertilizers, and passengers of Mexico’s “Interjet” will fly on the Russian aircraft “Sukhoi Superjet-100”.

Many Russian scientists are working in Mexico on a contract basis and a number of joint research projects are presently being carried out and Mexican specialists are currently being trained in Russian universities and colleges.

The strategic guidelines of their projects are reflected in the decisions of the Joint Commission on economic, trade, scientific-technical cooperation and maritime transport between Mexico and Russia. The legal framework of this cooperation is strengthened by the bilateral agreements which are results of work from state officials from both countries.

Russia and Mexico are strategic trading partners. Exhibit 1 summarizes the Trade Balance between Mexico and Russia. It shows that commerce between the two countries reached its maximum level in the year 2014 (US$1.8 billion). This certainly reflects the excellent moment that the bilateral relation is now having. The bilateral commerce historically has been negative for Mexico.

Several important factors in the trade balance between Mexico and Russia are revealing. Take, for instance, the fact that during the 14 year time span from January 1999 to December 2014, total exports from Mexico to Russia increased from US$2.57 million to US$274.10 million. And at the same time, imports from Russia to Mexico also showed an impressive growth from US$166.28 million (1999) to US$1.5 billion (2014).

Total commerce between the two countries and reciprocal action brought in US$ 1.78 billion during 2014 in trade between the two partners and has consistently been with sustained growth or similar figures, especially from the period since 2010. This was when, for the first time, that total commerce “stats” were available identifying the US$1 billion. And another interesting detail is that in 2014 there was an increase of 5.93% in commerce (US$1.78 billion) in comparison with (US$1.68 billion) in 2013.

Exhibit 2 shows Russian Investment in Mexico. During the period from January 2000 through December 2012, companies with capital from Russia invested US$3.1 million. According to this information, Russia has not been a major investor in Mexico.

At this time, there are 54 Companies with Russian investment. Among the leading Russian companies investing in Mexico is Silovye Machini.

In recent years Russian-Mexican cooperation in the scientific and technical fields developed under an effort entitled “The Program of Scientific and Technical Cooperation between the Russian Federation and the Mexican United States”. Its priority directions are satellite technologies, environment protection and nature management, the agricultural sector, biotechnology, information technologies (IT), software, robotics and nanotechnologies.

The greatest results were achieved in carrying out the project of launching of the Russian-Mexican satellites for Earth monitoring. For instance, researching the cosmic rays of ultrahigh energy is done. Another focus works on the control and economic loss enhancement in oil and natural gas transportation. Another activity is in research of the field of anti-tumor activity in strains and clones.

According to the Russian International Affairs Council (RIAC) there are ample opportunities to increase trade and investment between Russia and Mexico. In a recent white paper by Nikolay Kholodkov, a RIAC expert wrote:

Interjet’s Sukhoi Superjet-100
“The issue of upgrading the mechanism for government support of Russian business, including preferential taxation for the export of high-tech equipment remains pressing. Besides, the system of mutual settlements and insurance of export and import operations is still very vulnerable.”

“On the whole, it seems clear that, this decade, Russia and Mexico seem more interested in the expansion and deepening of their interaction in economic, scientific and technological areas, which is apparent from the increasingly frequent visits made by top officials and the active interaction of Russian and Mexican businesspeople on the sidelines. The same is true for the current preparations for the Russia-Mexico agreement on nuclear energy cooperation. There is undeniably more contact through chambers of commerce and business missions.”

“At the same time, the promotion of Russian business interests in the Mexican market does require more dynamic employment of the entire range of diplomatic, financial and information support. As an initial step, Russian exporters of highly innovative machinery could be granted lower customs duties and other tax concessions, as is widely practiced elsewhere in the world. Numerous benefits could result from the establishment of a joint fund for the encouragement and guarantees of mutual investment. It is important to remember the need for the continuous promotion of a positive image of Russia in Mexico, especially as anti-Russian rhetoric in Western media remains strong.” Kholodkov concluded.