St Petersburg International Economic Forum

The St Petersburg International Economic Forum in June 2016 hosted the leaders of several major foreign companies as it sought to establish closer ties with West. The fact that such leaders visited this forum was considered a sign, in some quarters, that Russia and the EU should consider easing sanctions given it would clearly assist in addressing the ongoing standoff between Russia and Ukraine. Notable attendees.amongst others, were the European Commission President Jean-Claude Juncker, UN Secretary General Ban Ki-moon and Italian Prime Minister Matteo Renzi.

Linde Group chief executive Wolfgang Buchel stated that Moscow is strongly interested in maintaining a dialogue between the EU and the Eurasian Economic Union and that he welcomed the fact that “Federal Chancellor Angela Merkel was also in favour of this dialogue,” which could eventually lead to the creation of an economic union stretching from Lisbon to Vladivostok.

Aside from the public rhetoric it has become apparent that privately many European organisations are disregarding the imposition of sanctions on Russia and they openly spoke about this at this forum stating that they saw no reason to conceal their business transactions. It was interesting to note that around 300 agreements were signed at St Petersburg worth an estimated $16bn, with Russian and Italian companies signing contracts worth $1.3 billion. In addition the Russian government alone signed 24 agreements worth $1.8billion. This was compared to 205 contracts worth $4.5 billion signed in 2015. Putin said at a joint press conference, in St Petersburg, with Italian Prime Minster Matteo Renzi that the personal participation by Mr. Renzi in this event ensured a high level of representation by Italian business circles and that he saw good prospects for localization of production facilities of Italian companies in Russia. Putin stressed that both countries would prioritize concrete steps aimed at boosting bilateral economic ties despite current difficulties.

Putin also stated at the forum that is was clear European businesses wished to cooperate with Russia and work for mutually beneficial aims and that it was time that Western governments acknowledge this fact and act accordingly.

The Swiss media was quick to pick up on this sentiment expressing the view that significant presence of Western companies was an indication of this desire to work with Russia rather than against them. Furthermore it was interesting to see how major Swiss corporations, such as ABB, Nestle and Novartis regarded Russia as an important place to investment and an important export market. They also a desire to look to export Russian goods to other nations.

Some notable comments from Western participants include the following:

• British Ambassador to Russia Laurie Bristow diplomatically suggested that “Her Majesty’s government supports development of business ties between Russia and the UK, but within sanctions and within the law.”

• Nicolas Sarkozy, the former president of France, called for anti-Russian sanctions to be lifted, adding that Europe has enough problems without them and said “Europe should work hand in hand with Russia. We are not interested in the Cold War.”

• “It’s the biggest foreign delegation I’ve seen here for many, many years,” Mark Otty, a partner at Ernst & Young confirmed. Otty said EY had noticed a 61 percent year-on-year increase in FDI projects in Russia.

• BP chief executive Bob Dudley said the company intended to continue its partnership with Rosneft, as it valued the long-term business relationship in Russia. In terms of sanctions he said, “I generally believe sanctions probably do not accomplish what they are meant to do, and I think it harms business, and I’m a big believer that trade between nations builds bridges between countries.”

• French MEP Rachida Dati said that the sanctions against Russia were bad, not only from an economic point of view, but they also hinder the global work against terrorism.

• “India’s Oil and Natural Gas Corporation (ONGC) plans to invest $5 billion in Russian projects this year,” said the company’s Managing Director Narendra Kumar Verma.

• The head of OMV of Austria Rainer Seele said “Russia has always been and continues to be a reliable supplier of energy to Europe.”

• Investors from Asia and the Middle East are taking the opportunity to more localize production in Russia, according to Ian Colebourne, the CEO of Deloitte CIS. “What we are seeing is particularly interesting: agriculture, pharmaceuticals, healthcare continue to be of interest.”

• Russian Deputy Prime Minister Aleksandr Zhukov said Procter & Gamble has signed a new investment agreement in Russia and is interested in staying for at least another 25 years.

• Total CEO Patrick Pouyanne stated that the company’s investments in Russia include the $30 billion Yamal LNG project. “We have just finalized the financing of it with the Russian and Chinese banks, so it’s a big commitment for our company. It’s the largest project that Total has today in the world and in Russia. So, despite the sanctions, we are moving on.”

• If you are interested in global energy policy then the St. Petersburg forum is “a must-attend because it’s a gathering of all the majors from the energy sector,” said former Australian Prime Minister Kevin Rudd.

• “Many investors from different parts of the world attending the forum are a good sign,” said UNECE Executive Secretary Christian Friis Bach.

• “The EU leadership has to realize that sanctions against Russia are an “absurd mechanism” that does more harm than good,” said the CEO of French trade and services firm CIFAL, Gilles Remy.

 

With thanks to RT for providing the quotes from various delegates.

 

For additional information on the outcomes of this 2016 economic forum , please refer to the following link

https://www.forumspb.com/en/2016/sections/67/materials/334

Editorial Comment

There is no doubt that despite the ongoing sanctions that are being applied to Russia, the delegates there expressed a desire to find the necessary workarounds to bypass these measures and in some quarters to express the sheer absurdity of continuing to implement them. The presence of many more foreign companies at this years forum than in previous years was seen as a recognition of the importance of working with Russia towards future bilateral trade.

This author believes that at some point soon the St Petersburg Forum will begin to supersede the Davos Economic Forum which is perceived in some quarters as being little more than an elite club gathering. It is clear that the St Petersburg forum has a greater emphasis placed on global economic cooperation. The lack of any significant US presence at this forum was a further indication of the ever increasing isolation of that nation and seemingly largely self-inflicted now by their belligerent stance towards Russia and other nations.