Doing business with Russia: Stuart Prior and Gerald McGhie suggest that it is time for mutual co-operation.

• Author: Prior, Stuart

Russia is a huge country, a critical component of the planetary eco-system and historically socially, culturally and economically a bridge between West and East.

This article builds on the extensive involvement New Zealand has had first with the Soviet Union from the middle to late 1970s, and then with Russia and, in particular, the extensive and detailed work done between 2003 and 2012 focusing on a suggested free trade agreement and an interlinked agricultural co-operation agreement which would have provided a strong governmental framework for the scientific, educational and business goals of both our countries.

The sheer size of Russia is daunting. If we look at agricultural land, Russia has about 200 million hectares of land, compared to New Zealand's approximately 11.5 million hectares. Thus our agricultural land is only 5.75 per cent of Russia's.

But from the perspective of New Zealand as a sea-reliant country, New Zealand's exclusive economic zone (under the UN Law of the Sea Convention) is 4 million square kilometres. Adding in our extended continental shelf of 1.7 million square kilometres gives us 5.7 million square kilometres. The landmass of Russia is about 17.1 million square kilometres. So as an oceanic entity New Zealand is a third the size of Russia.

Political context

The disruptions of the pandemic and the realities of climate change require us to consign to history our subconscious legacy of the 'Russian threat', which has shaped our view of the New Zealand-Russia relationship for a century and a half.

In February 1873 a frightening (although false) report from Auckland in the newspaper Southern Cross stated that the Imperial Russian Navy frigate 'Kaskowiski' had sailed into Auckland Harbour with malicious intent. Claims were made of the disabling of a British warship, landing of marines on shore and rounding up of prominent citizens and colonial officials, holding them at gunpoint in the Provincial Council Chamber. It was even said that Vice-Admiral Herodskoff had demanded a ransom of 250,000 [pounds sterling], or else he would give orders to burn Auckland to the ground.

This report caused panic in Auckland, but it was an invention for a political purpose. An early example of fake news this might have been, but the fear of a sea-borne attack by Russia prompted New Zealand to make major capital investments in the later 19th century in defences against maritime attack.

Human factor

The opening up of the Soviet Union under Mikhail Gorbachev in 1985 was seen by some New Zealand businessmen as offering serious reasons for looking at long-term and more stable business and other links. The Gorbachev period of change in the Soviet Union was coincident with the entrepreneurial changes in New Zealand which resulted from the pro-market revolution of 1984-85. It was not just the idea of New Zealand's selling a great deal of produce to the new Russia, but also the suggestion that there could be better and deeper opportunities for New Zealand in Russia that would help us place ourselves in the rapidly globalising world political economy.

An advantage for New Zealand was the critically important 'human factor'. New Zealanders found that they could get on with Russians. The 1980s changes saw New Zealand entrepreneurs and businesspeople visiting places hardly known to foreigners since the country closed up in the 1920s. They showed an aptitude for putting deals together in places like the Altai in south-west Siberia, Sakhalin Island, Irkutsk, Nakhodka, Novosibirsk and so on. Importantly, they developed mutual trust and respect.

Over many years as business developed, one of the authors of this paper (Stuart Prior) was in constant touch with many of these entrepreneurs and considered that, through their collaborations, they and their Russian partners were pointing to the outlines of a long-term strategy of mutually beneficial engagement.

Agricultural opportunities

What happens in Russia will be a critical factor in the world's response to the challenges of climate change. The opportunities for collaborations with Russia in the next decades are huge and New Zealand has...