This week the Saint Petersburg International Economic Forum, the biggest event in business life of Russia and its investors will take place. It is an annual gathering of influential Russian and international politicians and government officials, businessmen, representatives of academic community. The Forum aims to establish the framework for developing ties between politics and business on local and the international level. This is a place where business faces politics and all the challenges the nowadays complex international situation brings.
The First St. Petersburg Economic Forum was held in 1997 under the aegis of the Federation Council of Russia and the Inter-parliamentary Assembly of the Commonwealth of Independent States. The next year St. Petersburg Forum changed into a permanent body with a view to developing entrepreneurship in Russia, strengthening relations with international trading partners and attracting foreign investments.
Within the next few years the Forum grew up from a conference focused on the CIS integration processes to a grand economic event encompassing a wide range of business development issues and drawing intense international attention. In 2007 the St. Petersburg Forum and the World Economic Forum signed the memorandum on participation of the WEF in the work of Forum. Many heads of states and other high officials attended the Forum, turning it into the event of a global scale. Political officials and businessmen sign here cooperation agreements and contracts worth millions of dollars.
The President and his Forum
In 2005 Vladimir Putin attended the SPIEF for the first time. Since then, unofficially called “presidential”, the Forum has transformed into a highly political event. The President became an excellent decoy for Russian and foreign political and economic elite. He is the official identity of the Forum. In his speeches and during round table discussions Putin more often considers international politics issues.
The atmosphere on the last year’s Forum was a perfect reflection of the tense relations between Russia and the West over the Ukrainian crisis. In particular, the economic sanctions, coming after the annexation of Crimea, were the main subjects to discuss. Putin claimed that so far the sanctions target just “his friends, the people from his inner circle” and aim to “punish them, nobody knows why”. He also took the opportunity to deny once again that the annexation of Crimea was planned and the presence of Russian military in the region.
Although, the St. Petersburg Economic Forum was a convenient framework for the foreign companies presented in Russia, the large companies decided to stay away from the risks and maintain their reputation. A number of big European and American companies boycotted the 2014 Forum. Among others, the representatives of Boeing, Goldman Sachs, Siemens, the Coca-Cola Company refused to come to St. Petersburg. Many companies reduced their representation in the event. The White House confirmed that the Administration of the U.S. President advised CEOs to ignore the Forum.
SPIEF – 2015: Tendencies and expectations
This year the Forum expects more than 5,000 of participants. “Recent changes require cohesive actions from the international community to ensure sustainable, long-term development”, President Putin says. He will hold a meeting with CEOs of big companies and corporations, and discuss new challenges for business with heads of investment funds.
When the United States and Europe have blocked off the way to the West to a number of Russian politicians and businessmen and frozen the assets of several companies, Russian business faced serious challenges – many large Russian companies face difficulties in attracting European and American investors, purchasing of military equipment and dual-use goods. Also, a number of transactions in the energy sector were banned. However, the US and European companies involved in the Russian market are doing better than expected, although their activities are still subject to risk. Russia has been living under the sanctions regime for a year already and the forthcoming Forum might be a useful platform for reflection on the future of Russian economics and business.
Due to the Russian politics in Ukraine, a number of participants has been reduced significantly. Nevertheless, the organizers of the Forum are confident: “Political confrontation does not affect serious business”. They are ready to welcome some large American and European companies soon. BCG and McKinsey & Company, Metro AG and TUI AG, Ernst & Young, Shell, BP, Societe Generale, Total, Schlumberger, Metro and Carlsberg are among them.
New reference point – Focus on Asia
The St. Petersburg International Economic Forum may be devoted to finding new allies, experts say. Most likely, they will be found in the Asia-Pacific region and Latin America. This year, Russian companies are preparing to conclude preferential agreements on international trade with the Shanghai Cooperation Organization and BRICS member states, as well as Turkey, Israel, South Korea, India and Peru. Also the possibility of establishing a free trade zone with ASEAN and further development of the Eurasian Customs Union are actively discussed.
Already last year the tendency to reorient the big Russian companies to Asia became visible. For instance, Gazprom has struck the biggest bargain in its history with the Chinese CNPC – a contract worth $ 400 billion for 30 years. This year more representatives of Chinese business are expected to attend the Forum. The Japanese Toyota also plans to expand its presence in Russia, although with a view to producing vehicles for Europe but not for Russian domestic market – as ruble has become weaker and the purchasing power of the population decreased.
Saint Petersburg to become a business capital for a few days
The Forum is a good opportunity to show the attractiveness of Saint Petersburg for Russian and foreign investors. The City Administration adopted the law which benefits investments in such areas as health care, education, culture and sport, science and innovation. The legal procedures for licensing of the future investors are being simplified as well.
St. Petersburg will present its investment projects in transport infrastructure, science and innovation, energy, culture and tourism. A large part of the exhibition will be devoted to the development of the Arctic zone. The city will present the information about the region and its involvement in the development of these strategic for Russia territories. The models of the newest equipment for exploitation of the oil fields will be showcased.
Without any doubts the Forum promises to be interesting. The confrontation between Russia and the West evolves – the White House claimed that the U.S. Authorities of any level will not be represented, while Alexis Tsipras, the Prime Minister of Greece, is expected at the Forum to discuss the “Greek question” with Vladimir Putin. The forthcoming Saint Petersburg Economic Forum will face the new challenges of today’s political situation. It will show the capacities of Russia’s economy to manage them.