Confusing NGO Bill To Impact Business Groups

By Nikolaus von Twickel

The St. Petersburg Times

Published: July 18, 2012 (Issue # 1718)

MOSCOW — As a disputed bill branding foreign-funded nongovernmental organizations “foreign agents” waits approval by the Federation Council, confusion reigned Monday over the bill’s effect on large international business groups.

Representatives of both the Association of European Businesses and the Russo-German Chamber of Commerce said they fear that their organizations will fall under the legislation, since many of their member companies are registered abroad.

The term “foreign agent” is strongly suggestive of spying in Russian and could cause considerable embarrassment for business lobbying groups forced to adopt the label.

Andrew Somers, president of the American Chamber of Commerce in Russia, said his organization would be exempt because it is registered as a representative office of a U.S. organization.

“The draft bill explicitly limits the law to Russian noncommercial organizations,” he told The St. Petersburg Times, referring to the text published on the State Duma’s website.

But the Russo-German Chamber, which has more than 800 members, or about the same number as AmCham, said its legal status is that of a nongovernmental organization registered by the Justice Ministry.

“We expect that we will feel the brunt of it,” the chamber’s chief lawyer Vladimir Kobzev said by phone.

He explained that apart from mandating the use of the “foreign agent” title, the law will make for additional work for his group, since it stipulates that all foreign income be declared separately. “This means extra bookkeeping because so many of our members are based in Germany or other countries,” he said.

Frank Schauff, CEO of the Association of European Businesses, or AEB — which is also registered as an NGO — said he had sent a letter to the Justice Ministry asking for clarification.

“The question is whether our activities can be classified as political,” he told The St. Petersburg Times.

The draft law, which passed by a wide majority in the Duma last Friday, has been lambasted by critics inside and outside the country as a punishment for pro-democracy NGOs, which Vladimir Putin has publicly accused of seeking to subvert the government with money from the U.S. State Department.

The bill is expected to be approved by the Federation Council on July 18, after which Putin could sign it into law.

But critics say that because the bill was rushed through the Duma, some obviously unintended effects have been overlooked, both for international and domestic business associations, who also have fee-paying foreign members.

Kobzev, of the German Chamber, said that the law amounts to harassing foreign investors.

“The same state that constantly trumpets the importance of Russia’s attractiveness to foreign investors practically brands their money as suspicious and sets extra strict controls and conditions that cannot be fulfilled for their use,” he said.

The heads of prominent business associations and other nongovernmental groups, including Alexander Shokhin of the Russian Union of Entrepreneurs and Industrialists and Sergei Borisov of Opora, have signed a letter addressed to Putin and Prime Minister Dmitry Medvedev in which they ask both leaders to hold the bill for further discussion until fall. The letter was also signed by former Finance Minister Alexei Kudrin and Igor Chestin, the head of the Russian branch of the World Wildlife Fund, Interfax reported.

The text approved by the Duma exempts “employers’ associations and chambers of commerce and industry.” But experts said that while this excludes the country’s official Chamber of Industry and Commerce from the law’s effects, it was unclear if it extends to other national business associations.