The St. Petersburg International Economic Forum (SPIEF) took place on June 16-18, the highly touted “Russian Davos” showcasing prospects and investment deals. Participants at the forum included Russian companies Lukoil, VTB Bank, and Rostelecom, as well as international companies Bank of America, Hyundai, and BP.  The three-day forum highlighted Russia’s international focus, ranging from proclamations of cooperation between Kazakhstan and Russia to support Belarus’ floundering economy, railway deals between Spain’s Talgo and Russian Railways, and the growing economic ties between Russia and China.

According to Minister of Economic Development Elvira Nabiullina, more than 50 agreements totaling more than 200 billion rubles ($7 billion) were signed at this year’s forum. Some of these deals included a $1.7 billion agreement between Russia and France for two Mistral-class helicopter carrier ships and Nordic telecoms firm Tele2’s announcement of an additional $300-500 million annual investment in the Russian market.

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Belarus · China · foreign investment · Medvedev · oil & gas · SPIEF

Image courtesy of RIA Novosti

An official Russian poll has revealed that, though the number of petty bribes has decreased, the cost of bribery has increased since 2001. The Economic Development Ministry’s study of “everyday” bribery indicates that Russians paid approximately 164 billion rubles – about $5.9 billion – to universities, traffic policemen, and even for admittance to kindergarten. This is double the reported number in 2005. In one of the more outlandish accounts of corruption, an army officer has been accused of accepting a puppy as a bribe from a conscript who wanted permission to go on leave more frequently than soldiers normally do. It seems that Gogol’s corrupt judge from the 1836 play, “The Government Inspector,” had twenty-first century taste when he pronounced “I tell everyone plainly that I take bribes, but what kind of bribes? Why, greyhound puppies.”

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corruption · foreign investment · Russia

Blake Marshall, The PBN Company’s Senior Vice President of Government Relations and Managing Director in Washington, participated in a discussion on June 16 on the U.S. role in Russia’s economic development. The teleconference was hosted by RIA Novosti.

“Russia’s Economic Development: The U.S. Factor.” In recent years, United States government officials and even President Obama have repeatedly expressed their desire to repeal the discriminatory Jackson-Vanik Amendment against Russia. On April 19, 2011, a U.S. court ruled the amendment unconstitutional. How likely is a repeal in the near future? What is the U.S. position regarding Russia’s WTO accession and the development of its foreign relations?

PBN · Russia · trade · U.S. · WTO

Russia’s stock market boomed during the first quarter, outperforming every other leading market, as oil prices grew due to unrest in the Middle East. However, both foreign and domestic investors remain cautious while watching the political confusion about the upcoming elections in March 2012. Concern about who will enter the presidential race next year is not the only factor. The slow pace of economic reforms, primarily determined by high oil prices, widespread corruption, and concern about corporate governance undermine investors’ confidence in the Russian market.

According to calculations of the Independent Directors Association (IDA), in 2010, the Russian economy missed out on about $50 billion of investments due to the low quality of corporate governance.

The Independent Directors Association (IDA) is a professional organization of corporate directors, founded on principles of self-regulation. Its mission is to render assistance to Russian companies and to enhance the effectiveness of their activities by means of integrating cutting-edge practices in the work of independent directors.

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corporate governance · Russia

The VII World Islamic Economic Forum (WIEF) (also known as the “Islamic Davos”) was held on June 7-9 in Astana under the theme of globalisation, competition and cooperation for mobilizing Muslim and non-Muslim countries to greater economic independence through open channels of multilateral relations and strategic cooperation. Around 4,000 participants from international organizations and business, as well s  scientists, politicians and other experts arrived from 45 countries. During the Forum, President Nursultan Nazarbayev proposed the creation of a international innovation center with the participation of Muslim countries. His idea includes creating a special team under the WIEF to support SMEs and to discuss  creation of a fund to support them under the Islamic Development Bank (IDB). The main goal is to establish an “Islamic G10″ as a dialogue platform for the leading economies of the Muslim world.

President Nazarbayev noted that Kazakhstan is actively using its geopolitical position to further develop an international transit corridor. Since Kazakhstan is now building new railways, extending traffic to China and the Persian Gulf countries, Nazarbayev proposed involving the Islamic Development Bank in financing the construction of a $1.5 billion Kazakhstan-Turkmenistan-Iran railway.

The president also proposed to develop a system of food aid within the Organization of the Islamic Conference (OIC) based from the regional fund utilized by the Food and Agricultural Organization in the structure of the IDB Group and OIC member countries. Further to such ambitions, Nazarbayev proposes to set up the organization’s head office in Kazakhstan “as the country is actively developing the export potential of food.”

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banking · finance · financial center · Islamic Finance · Kazakhstan · Nazarbaev

The International Monetary Fund plans to complete the election of a new director by June 30. According to the established practice, a representative from America is always appointed as the head of the World Bank and an European’s representative  as the head of the IMF. Emerging economies that want to increase their impact on global finance institutes are dissatisfied with such tradition. However, the European Commission asserts that the new head of the IMF should be chosen from the greatest contributors to the fund– developed countries.

At the meeting of the Council of CIS Government Heads on May 19 in Minsk, Kazakhstan’s Prime Minister Karim Masimov nominated National Bank of Kazakhstan chief Grigory Marchenko to head the International Monetary Fund. The Council supported this candidacy and endorsed Marchenko as the single candidate from the CIS countries. Kazakhstan has already begun negotiations with a number of developing countries, including the BRICS.

“Developing countries for the first time have a chance to challenge the tradition of appointing  contenders of Western Europe to head the IMF.  I will have a real chance if there is an agreement at the highest political level between major developing countries,” said Marchenko. “The International Monetary Fund, as well as the World Bank, are two international financial institutions, where developed countries have traditionally been dominated for 65 years,” he added.

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finance · IMF · Kazakhstan