Can Russia and America finally start a reset process after years of frosty near-silence?

Can Russia and America finally start a reset process after years of frosty near-silence?

A whirling dervish of supposed Kremlin spies, honeytraps, MI6 agents and double bluffs defined a week eerily reminiscent of Cold War days, before President Donald Trump's inauguration last Friday (20 January), while the new American Commander-in-Chief has started his tenure in a similar blizzard of activity, which has seen an automotive border tax rear its head once more and the big US car three rapidly invited to the White House.

But the election of Trump, in itself hugely controversial, could have implications far beyond his desire to concentrate on domestic stimulus; might it actually, if unwittingly, help to thaw the deep-frozen relationship with Russia and aid that country to emerge from its four-year automotive slump?

An almost perfect and toxic cocktail of rampantly high interest rates, crippling inflation, a plummeting oil price and punitive sanctions from a West venting its anger against Moscow's annexation of Crimea and supposed involved in Eastern Ukraine, has seen Russian consumer confidence fall through the floor and car dealerships deserted.

But 2016 full-year numbers from Moscow's Association of European Businesses Automobile Manufacturers Committee (AMC), coupled with two consecutive months of dramatic arrests in the precipitous falls of the past four years, have prompted some to cautiously predict the worst may be over.

Figures from the AMC in Moscow show 2016 new car and LCV sales dropped 11 % or 176,319 units to 1.42m vehicles compared with the same period the previous year, while last month showed just a 1% fall, leading chairman, Joerg Schreiber, to issue a positively sunny analysis compared to his previous downbeat assessments.

"A nearly balanced year-on-year performance in December concludes a similarly balanced fourth quarter," said Schreiber. "After double-digit losses in the first nine months of the year, this is good progress. The market as a whole is still lacking positive momentum, but apparently is in process of finally establishing its bottom."

Total market sales are expected to be 1.48m units, or 4% above the 2016 result and this may be in part due to The Kremlin's decision to pump RUB50bn (US$838m) into the automotive industry, mainly through an aim to reduce car parc age, while lower vehicle credit and rental rates programmes remained. Russian companies also received financial support on their investment credits, with the State allocating funds to regional authorities.

That is what you would expect Moscow to do given the importance of the sector and its implications for jobs and manufacturing, but there genuinely seems to be a more optimistic mood abroad in Russia and since Donald Trump secured victory in the American Presidential election last November.

The first few years of President Barack Obama's administration were characterised by an initial flurry of goodwill in both Moscow and Washington, with mutual visits, nuclear weapons reductions treaties and the inking of a deal which saw Iran regain at least some semblance of normality on the international business stage, but the dying embers of the outgoing American Commander-in-Chief were radically different.

Relations appear to have plunged into a deep freeze, largely triggered by Russia's brazen intervention in Crimea and its supposed destabilising effect on Eastern Ukraine, with any contact between both Heads of State glacially polite, but going absolutely nowhere.

Meanwhile, the previous glut of oil surging onto the world's markets saw barrel prices fall through the floor to reach US$30 and below, draining The Kremlin's coffers and scuppering its ability to prop up ailing industries, including auto, which saw dealerships spookily empty as consumers fled any sign of big ticket purchases.

But since November, oil has steadily strengthened, currently peaking at US$55, which, although nowhere near the heady days of before, is nonetheless starting to replenish Moscow's depleted coffers and provide Russia with some financial firepower, all just as Trump walks into the Oval Office.

And that entry into office of the feverishly energetic Trump might just be the spark Russia so urgently needs to start rekindling its economy. Despite squadrons of civil servants whose task it is to beaver behind the scenes and propose policy, it is nonetheless a truism that personal chemistry between world leaders remains a crucial cog in the diplomatic wheel. Margaret Thatcher and Ronald Reagan, Mikhail Gorbachev with both those two, Bill Clinton and Tony Blair, Francois Mitterrand and Helmut Kohl, all royally hit it off, at least while the cameras were running.

But Presidents Obama and Putin gave every impression they certainly didn't get on, with face to face meetings almost drying up in the last couple of years of the last Washington administration, culminating in the expulsion of 35 Russian diplomats from the US, although mysteriously not attracting the usual tit-for-tat retaliation from Moscow.

Russian Prime Minister, Dmitry Medvedev, laid bare the extent of the breakdown in superpower relations in stark terms recently. "US-Russia relations completely fell apart by the end of the second term of the Obama administration," he said. "The Obama administration was completely short-sighted on such an important and complex issue as relations with Russia.

"The most important thing was to remember Russia is not a banana republic. It is unacceptable to talk to a country which is a permanent member of the UN Security Council in such a manner. A country with defensive capabilities equal to the US."

But just days into Trump's new government and the excited chatter winging its way between Moscow and Washington is not if Putin will meet the new US chief, but when. Trump's seemingly boundless enthusiasm to carry out policy quickly – he is dangling the real possibility of a 35% border tax on imported cars to the US again – may mean this takes place much sooner than later.

Whatever the view of either President's policies, such a rapprochement surely has to be welcomed? In that telling line from Medvedev that Russia is the defensive equal of the US, any move to see the two countries with the world's largest nuclear arsenals talking again must be good news for global stability and by implication, economic prospects for Moscow.

Whether or not the issue of sanctions against Russia are imminently addressed is not yet clear. But their possible removal, coupled with a recovering, albeit slowly, Russian economy, higher oil prices and a dramatically slowing inflation rate from eye-watering levels only a couple of years ago to a more manageable 5% today, all swirl around in Russia's complex economic jigsaw and may yet provide a boost to car sales.

This March will see the 20th anniversary of the Russian Automotive Forum in Moscow and after the almost undiluted gloom lurking over the conference in recent years, it seems as if the latest AEB figures will provide a more optimistic soundtrack to speeches from purchasing managers, politicians, suppliers and OEMs.

This being Russia, it could be a house of cards with unknown challenges yet to confound manufacturing, but the country has some of the single most resilient people on earth, who have proved remarkably tough in the face of unprecedented economic headwinds.

This week saw President Trump invite a plethora of America's top CEO's to the White House, including Fiat Chrysler's Sergio Marchionne, General Motors' Mary Barra and Ford's Mark Fields, the latter meeting the US Commander-in-Chief for the second time in two days and after his company announced it would scrap plans to build a plant in Mexico and create more American jobs.

That White House meeting comes hot on the heels of Trump's much-vaunted plan to pull the US out of the Trans-Pacific Partnership (TPP) – a move swiftly applauded by America's influential UAW union – although whether such a retreat to concentrate on jobs at home will now scupper the Transatlantic Trade and Investment Partnership (TTIP) will have European Union (EU) officials anxiously reading the runes.

I don't know if Vladimir Putin has held similar talks with AvtoVAZ and GAZ - the Russian President publicly drove one of the Togliatti vehicles in a show of solidarity last year - but his administration has supported the Russian automotive sector with a massive stimulus designed to stave off the worst and prevent the sales slide from turning into a rout.

But in any case as Moscow starts to show signs of a stronger economic pulse, the Russian President will surely have taken note of his Prime Minister's comments concerning America before any summit with Trump takes place perhaps on neutral territory such as Reykjavik, in a nod to the ice-breaking fireside chats between Gorbachev and Reagan.

The normally mild-mannered Medvedev pulls no punches when it came to his disdain for the former American government and deliberately raises the issue of sanctions – and by implication their dissolution – in a booming denunciation.

"The pressure on our country has reached unprecedented proportions," thunders Medvedev. "Ill-considered economic sanctions, which did no one any good, have reduced our cooperation to zero. The bet was on brute force and sheer pressure. It is impossible to imagine such actions even during the Cuban missile crisis, even though the situation was much more serious then.

"The Obama administration has destroyed relations between the US and Russia, which are at their lowest point in decades.

"We do not know yet how the new US administration will approach relations with our country. But we are hoping reason will prevail. And we are ready to do our share of the work in order to improve the relationship."

On such relationships can moods change and optimism prevail. Can Trump - elected in one of the most divisive campaigns in American history - cut through the years of stasis and move Moscow and Washington closer together?  As I write this, I've just heard President Putin will telephone Trump tomorrow, the first concrete step in moves to reset a hitherto moribund relationship.

Could that call herald a small wave of optimism in Russia, which starts to build into financial reality, that begins to see its citizens, if not flock, at least peer through the car showroom windows?