February 7, 2011
In coming decades Russia has strong chances of joining the short list of the world’s largest economies, while Moscow has the potential and capabilities of becoming an international financial center. However, achieving these ambitious goals will depend upon how effectively the Russian government and business community are able to diversify the economy and attract international investments. Discussions at Troika Dialog’s investor conference The Russia Forum 2011 centered on current challenges facing Russia, the new balance of forces on the world geopolitical and economic arenas and the various risks facing its players.
The Russia Forum 2011 was the fourth edition of Troika Dialog’s leading annual investors’ conference held in Moscow with a focus on Russian and CIS markets. The trend speaks for itself: year in and out interest in the Forum, and thus in Russia, is growing. Participants in this year’s discussion platform exceeded 2000 in number, a distinguished list comprised of world-renowned economists, executives from leading companies and investment funds, financiers, businessmen and politicians. Coverage of the Forum was provided by approximately 600 journalists from leading Russian and foreign media. The Forum program consisted of more than 20 panel discussions and sessions devoted to a broad range of questions having to do with post-crisis Russia and today’s global economic model.
During the Forum, some 113 speakers addressed the event’s guests and participants with thought-provoking speeches. Key speakers at The Russia Forum 2011 included Alexei Kudrin, Deputy Prime Minister, Minister of Finance of the Russian Federation, Arkady Dvorkovich, Aide to the President of the Russian Federation, Sergey Sobyanin, Mayor of Moscow, Herman Gref, Chairman of the Board, CEO, Sberbank, as well as leading representatives of Western business and academic communities, such as Nouriel Roubini, Professor of Economics, New York University’s Stern School of Business, Lawrence Summers, Professor at the Harvard Kennedy School, Michael Milken, Chairman of the Milken Institute, and Nobel Prize winner Joseph Stiglitz.
In modern Russia the number of challenges facing the country and the amount of opportunities for growth are about equal – such was the frequently-overheard opinion throughout the sessions. Investors expressed genuine interest in the future liberalization of the Russian economy, reformation and modernization of all its spheres, and privatization of state enterprises. According to Arkady Dvorkovich, Aide to the President of the Russian Federation, “We’re going to prioritize the Russian market – this fully agrees with our plans to create an international financial center. But if we don’t see enough liquidity we’ll look into markets from where people are ready to invest directly in Russia, like London, New York and Hong Kong.” Moscow Mayor Sergey Sobyanin is sanguine on the outlook for Russia’s capital, yet remarked that without developed infrastructure, lower corruption levels and clear “rules of the game” Moscow won’t compete with financial centers like New York, London and Singapore.
A series of panel sessions devoted to the current situation and growth outlook on various sectors of the Russian economy discussed long-term steps to raise competitiveness and investment attractiveness. Telecommunications, agriculture, real estate, the banking sector, infrastructure and transport – all of these spheres are dynamically growing in Russia, although the potential of Russian business could be even more impressive if corruption levels were lower, the state reduced its role in the private sector, and legislative norms were further perfected. In addition, important news regarding the Russian market was relayed to foreign investors and international rating agencies, for example by Shamil Kurmashon, Deputy General Director for Finance and Investment, Aeroflot, who said, “The time of low-lying assets in Russia has passed – everything here costs what it should. And whereas before we were being chosen, now we are the ones choosing. The time has come to review the methodology of credit ratings regarding Russia, to moderate appetites for profits and to stop discounting our issuers.”
Most economists and investors continue to view Russia as a legitimate member of BRIC, although they recognize that China and India hold the clear edge in terms of development. All were in agreement that Asia remains the key driver of world economic growth due to the region’s emerging middle class and growing consumption levels. However, hardly anyone doubts that China will sooner or later have a “rough landing.” According to Sunil Godhwani, Chairman, Managing Director, Religare Enterprises Limited, the situation on emerging markets could become unpredictable. It’s still an open question – will the Asian locomotives withstand the burden? Developed and emerging market countries should build up cooperation, acting in concert, so as to more effectively offset risks and to reduce the existing gap in development. Lawrence Summers, former Chief Economic Advisor to U.S. President Barack Obama, was cautiously optimistic on the outlook for exiting the crisis and learning its lessons: “If growth continues in the U.S. and it is acknowledged that world trade depends upon integration of manufacturing, the world will emerge from the crisis.”
In its 2011 edition, The Russia Forum once again served as an effective platform for productive dialogue, as well as for bilateral meetings between members of the business and investment communities with a fundamental interest in understanding the economic weather in Russia and changes in the global environment.
A wide range of charity events are traditionally included in Russia Forum programs, and this year was no exception. In particular, total donations to benefit the charity fund “Podari Zhizn!” gathered at the celebration of Troika’s 20-year anniversary held during the Forum exceeded R500,000, while the charity evening at TV station “Dozhd” yielded R2,300,000 in donations to benefit Charity Hospice Fund “Vera”.