Economic Crisis Set to Dominate Forum
By Boris Kamchev
The St. Petersburg Times
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Alexander Belenky / The St. Petersburg Times
Finance Minister Alexei Kudrin is expected to speak on the final day of the forum.
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Organizers of the annual International Economic Forum in St. Petersburg last spring boasted that the event is becoming “a second Davos,” a supreme showcase of Russia’s vast and diversified business potential. This confidence was largely based on then-skyrocketing oil and gas prices. But with the Russian economy now facing a recession due to the fall of crude prices and markets after financial turmoil developed in the second half of 2008, the tone and hopes of the forum’s hosts have become more modest. This year’s forum, like dozens of such business events around the world, is all about anti-crisis measures. With the budget having been slashed by 25 percent and the number of participants significantly less than last year’s forum, the organizing committee insists that the economic crisis has not affected preparations for the forum. “Together with the Economy Ministry, we have succeeded in maintaining the level and importance of the forum,” St. Petersburg Governor Valentina Matviyenko said last week during a press event arranged by the forum’s organizing committee. Minister for Economic Development Elvira Nabiullina said that this year’s forum would devote a lot of attention to the problems of small and medium-sized businesses. “A program has been developed to help entrepreneurs with small and medium-sized businesses to open new companies, especially in innovative spheres,” said Nabuillina. After the documents for the program have been signed, around 700 entrepreneurs will be entitled to receive 300,000 rubles ($9,730) to start and develop their business projects. An exhibition presenting St. Petersburg as a business and tourist destination will feature for the first time at this year’s forum in Lenexpo exhibition center, the forum’s traditional venue. The exhibition will set back the city budget an additional $1.7 million. The forum’s program focuses mainly on the global economic crisis and its consequences for the economies of various countries. As a result, most of the participants of this year’s forum are from auditing and consulting companies, while last year’s event was dominated by developers and construction companies. Finance Minister Alexei Kudrin has called the forum a chance to assess what the governments of developing countries have done so far to try to weather the crisis. “Of course, the positions of our countries, including the BRIC nations [Brazil, Russia, India, China] in overcoming the crisis will be developed here,” Kudrin was quoted by RIA Novosti as saying. “I believe this is a very timely forum in the crisis period. Today Russia has become a site for discussing the position of developing markets on the global market,” he said. The forum’s opening on Thursday will be “International Day,” covering the topic of Russia-EU business dialog. Russia-U.S. business dialog will mostly be devoted to economic cooperation as a key factor in “resetting” Russia-U.S. relations. Many predict a major thaw between the two global powers when U.S. president Barack Obama pays his first visit to Russia in July. The forum officially opens on Friday, with “Economics Day” — a plenary session at which the main guest will be president Dmitry Medvedev. He is set to deliver a keynote address entitled “The global economic crisis: First lessons and leading the way forward.” “It’s important not how, but where we are heading out of the crisis,” said Yevsei Gurvich, head of the Economic Expert Group. “We have to discuss the new model of growth.” He said that in the current situation, the forum should provide intelligent answers on the prospects of the global economic crisis. “The sharp drop in oil prices has shown that the Russian economy should rely on other sources,” he said. Western experts agree. In his latest paper, “Russia in 2009-10,” Daniel Thorniley, senior vice president of the Economist Group, argues that Russia’s GDP, stock market prices and the ruble are now inextricably linked to global oil prices. Consequently, the forum’s program also includes a panel discussion entitled “The Price of Oil,” between numerous government participants and leading international CEOs, including deputy prime minster Igor Sechin, Gazprom’s Alexei Miller, LukOil’s Vagit Alekperov and Shell’s Jeroen Vand der Veer, as well as senior consultants such as Dr. Daniel Yergin, chairman of Cambridge Energy Research Associates and Nobuo Tanaka, executive director of the International Energy Agency. Nabuillina and Vikram Pandit, the chief executive of City Group, are expected to take part in the panel discussion “Anti-Crisis Programs: Scale And Limits of Government Intervention in the Context of a Market Economy,” on what forms government investment and debate on nationalization should take, and on how public-private partnerships can effectively replace direct state interference and what measures Russia should take. Kudrin is expected to speak on the forum’s third day — “Financial Day” — during the plenary session “Post Crisis Financial Architecture,” in which the current global financial landscape will be discussed, focusing on reforming international monetary institutions (the IMF and World Bank). The St. Petersburg International Economic forum had its peak in 2007 and 2008, when deals were signed worth $13.5 billion and $14.6 billion respectively, though many projects have been put on hold due to the crisis, including the Orlov tunnel under the River Neva, the New Holland multifunctional center and other development and housing projects. Neither the forum’s organizing committee nor the Ministry for Economic Development could provide forecasts as to whether any deals were planned for this year’s event.
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