“Kommersant”: “Foreign Investors share some of their headaches with the Prime Minister”
Vladimir Putin received investors in a somewhat informal setting at the Baltschug Hotel.
Prime Minister Vladimir Putin met with the members of the Foreign Investment Advisory Council at the Baltschug-Kempinski Hotel yesterday. The investors filled him on their reasons for wishing to invest in Russia's economy. Interestingly enough, however, they've also been explaining to Kommersant's Andrei Kolesnikov why they no longer had any desire to invest in Russia.
The Russian Prime Minister met with foreign investors at the Baltschug-Kempinski Hotel. A similar meeting took place just two years earlier at the President Hotel, which is owned by the Russian president's administrative office. Yet, it was decided a year ago that the meeting should carry a symbolic, if not mystical, message, which is exactly why the venue was moved to the Baltschug Hotel, itself an object and certainly a subject of foreign investments.
The symbolism and mysticism (probably unwittingly, though I suspect that there were subconscious urges) were further augmented by the fact that the meeting took place in the Wladimir Room. Last time, the participants had entered through a door marked "Wladimir", but this time around they used a door marked "Wladimir I". If we subscribe to the theory that the numbers indicate not only different entrances to the room but also the different personas Putin has had - first the President and then the Prime Minister, for instance - it might be a good idea to keep a close eye on the door now marked "Wladimir II".
The meeting was scheduled for 1:00 pm. As one participant explained, he had come to Moscow without the slightest inkling of what exactly the subject of discussion at the meeting would be, but he was absolutely positive that the meeting would not start on time.
Fortunately, the meeting started only an hour late - almost on time.
Putin noted that the meeting was taking place on the 20th anniversary of the fall of the Berlin Wall, a great milestone not only for Germany but for the rest of the globe as well.
As he went on to point out, the fall of the wall closed the chapter on a "sad past" (interestingly enough, opinion polls have revealed that many citizens of the former GDR do not share his sentiments about that past being "sad") and was a "landmark event in the unification of all of Europe."
With this, Putin made it quite clear that he believes the unification of Europe within common borders began with the reunification of the GDR and the FRG, meaning that the Soviet Union's role should by no means be underestimated and, more importantly, neither should that of its legal heir, the Russian Federation. (And as usual, nobody expressed any gratitude for this).
Moving on from "various business items" to the main agenda, the prime minister said that the "overwhelming majority of foreign investors had no regrets about choosing Russia" (apparently the overwhelming minority does not count).
Those present in the room, the prime minister said, "represent firms which have already invested $90 billion in Russia's economy (thereby becoming Russia's hostages - A.K.). "This is a considerable sum. The majority, I understand, will continue to invest even more" (though what other option do they really have? - A.K.). The prime minister said that he was ready and willing to discuss what the "Russian government should do to make an investment breakthrough." He may not have expected his polite remark to spark such a response, but the foreign investors eagerly broke into discussion about it.
James Turley, Chairman of the Board of Directors and Chief Executive Officer of Ernst & Young, noted that the Russian government may very well emerge from the crisis earlier than others (he did not say whether or not the Russian economy would emerge along with it) and added that in reality, the most important thing was the development of a new structure of relations with foreign investors.
Mr Turley didn't hold back. He shared a cautionary tale: "Due to administrative delays, one major foreign company started its construction project in Moscow a year later than it could have actually started." (The delay was not much different from Putin being late for the meeting, though, probably no big deal).
"The current system for issuing licenses, permits and certificates just makes Russia less attractive," Mr Turley said, expressing his concern. "And then there are also problems with transport and infrastructure..." Mr Turley's afterthought rendered any further discussion pretty meaningless: the problem of Russia's attractiveness as an investment destination automatically lost relevance.
But Putin took issue with that claim. He warmly thanked Mr Turley for his positive assessment. At first, I couldn't believe my ears, but Putin actually thanked him for his "judicious critical remarks."
He interpreted "administrative delays" as "excessive red tape".
"This is a dire consequence of the market... em... I mean the planned economy," the prime minister said, quickly correcting himself. "It is when the bureaucrat knows better than the investor does what to do, how to do it and when."
He assured the room that Russian authorities were working hard to tackle the problem.
"We are dealing with it, albeit not as quickly as one would like." (He was referring to foreign investors, apparently, because Russian bureaucrats are not at all eager to see such a change - A.K.).
According to Putin, foreign investors will soon be required to merely notify the authorities of the start of their business rather than seek permits.
As he put it, "The Russian economy has suffered a contraction of the market and a drop in prices - in effect, a double blow."
This seems to imply that it wouldn't be fair to expect Russia to deliver a favourable investment climate any time soon.
Even so, investors came out of the meeting bright-eyed, the expressions on their faces belying everything they had just been saying.
Curiously, when citing examples of arbitrary administrative acts by the Russian authorities, none of them actually cited the experience of their own companies (having worked in Russia, they all know better). Instead, they used some unnamed large or even transnational companies as examples.
A representative of one of these companies shared one such instance with me.
Ever since 2006, investors with plans to come to Russia must have their professional credentials checked in order to do so. Their university degrees have to be notarised in a special way at the university where they received them, and documentary proof then must be brought to Russia.
"Some of them grew up in Germany, for example, and then graduated from two different universities in the US, never returned there and now work as presidents and vice presidents of major corporations. And they are required to get these degrees personally certified at the universities that issued them. But they have no intentions of ever going back there, and the same goes for Russia if they're forced to abide by these requirements. China is better: it doesn't set such requirements and it's hard to imagine that it ever will."
But then, let's be honest, these investors would love any excuse to invest in China.
