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en.wikipedia.org/wiki/Yevgeny_Primakov Yevgeny Primakov Economy
03
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Prediction Even in crisis, Russia still
Politics Policy prophet looks forward to Obama
remains a promising business destination
Primakov’s “World
Business
Without Russia”
tion that Russia lost the “Cold
Yevgeny Primakov, former War” –a misguided myth, he
Pioneers
Russian prime minister, is RN Dossier writes, because Moscow re-
promoting his new book, “A tained its nuclear capabilities.
world without Russia? Where Primakov was born in Kiev in This myth had a substantial in-
Short-sighted Political 1929. He was a close Gor- fluence, however: Russia was
Thinking Can Lead.” Its pages bachev adviser in the 1980s, written off as a great power.
contain hope and optimism and later directed the Foreign The author also writes
for the Obama presidency, as Intelligence Service and Min- that the stereotypes born in
well as a potent warning not istry of Foreign Affairs before the days of confrontation have
The crisis has not affected the
to underestimate his country. becoming prime minister. He survived the actual “Cold War,”
also served as a member of and that suspicions of Russia
business visions of key play- DMITRY SABOV
the state Duma. Since 2001, are based on attitudes formed
ers. Global markets remain dy-
RUSSIA NOW he has been president of the during that time. Primakov
Chamber of Commerce and openly admits that this “also
namic, says Ernst & Young CIS
Yevgeny Primakov, former Industry of Russia. happens in Russian public opin-
prime minister, Arabic speak- ion with regard to the U.S. and
partner Alexander Ivlev
er, Orientalist, former director its European allies."
of foreign intelligence, is still implosion of the former Yugo- “With Barack Obama com-
one of the most influential fig- slavia and war in Kosovo. ing to power, new prospects
FROM PERSONAL ARCHIVES ures on the Russian stage. Pri- His analysis of relations be- are opening up,” said Yevge-
makov has written a new book tween post-Soviet Russia and ny Primakov at his book launch.
that chronicles the chilling of the West begins with a rebut- “We must make the most of
Russian-American relations over tal of the widely held assump- this.”
-
The global economic crisis the last decade. In the same
and rather gloomy forecasts
RN Dossier
als serving over 4,000 clients However, as experts, you must tome, he also predicts the po-
for 2009 have forced many in 16 offices throughout the surely see Russia’s real prob- tential of a new thaw with the
companies to scale down Commonwealth of Independent lems... administration of President Ba-
their activities and switch Ernst & Young is a global lead- States (CIS) today. There may be some who don’t rack Obama.
over to simply monitoring the er in assurance, tax and le- Since 1996, Ernst & Young like the fact that we now admit In "A World Without Russia?
market. Ernst & Young gal, transaction and advisory acted as auditor and reporting the existence of problems, but Where Short-Sighted Political
partner Ivlev asserts that services. With the opening of accountant on IPO transac- choose to focus on the ways to Thinking Can Lead," he ulti-
even against the backdrop of its Moscow office in 1989, it tions for 30 companies in Rus- solve them. There are many fac- mately offers up hope for the
the crisis, Russia still became the first professional sia and the CIS, with a total of tors that make Russia a compli- Obama team because current
remains an opportunity for services firm to establish op- $27.9 billion raised in these cated country. Those who focus U.S. policymakers seek dialogue
investors. erations in Russia. Since then, offerings. only on the problems lose sight with Russia. Primakov writes that
Ernst & Young has expand- Ernst & Young is committed to of real opportunities. Russia, too, should seize the mo-
IRINA KOZYREVA
ed its services and resourc- serving not only clients but al- It took Russia only 15 years ment.
RUSSIA NOW es in accordance with clients’ so communities, through their to do what some countries Primakov's opinions are often
needs. involvement in the Foreign In- achieved over centuries. Rus- heeded by Russian policymak-
What is happening in the Rus- The practice grew from a sin- vestment Advisory Council in sia’s growing economy... re- ers and pundits. He has been
sian market today? gle employee in Moscow in Russia, Belarus, Ukraine and veals new challenges and of- at the center of Russia's tumul-
Statistics show very dynamic 1989 to 3,900 profession- Kazakhstan. fers their solutions in real-time. tuous history, as well as events SERGEY SAVOSTIANOV_RG
growth for the Russian market What is even more fascinating on the world stage, from the Evgeny Primakov signs copies of his new book, published by
over the last ten years. Russian is that the problems are being collapse of the U.S.S.R. to the Rossiyskaya Gazeta
and foreign companies have resolved.
been able to work in a new busi- cooperation between the U.S. they obtained earlier). The out- Near the end of the 1990s,
ness environment and benefit and Russia. flow of bank deposits seen in federal laws in Russia didn’t
from extensive economic re- November 2008 had been re- work, and power was diluted
forms. Russia has made signifi- Even so, apprehension about placed by an inflow by Decem- among the regions. That time
Diagnosis Research from one investment bank
cant progress in its transition to Russia is quite widespread in ber 2008. the government focused on the
a market economy, with a high the international business com- The transformation of depos- consolidation of the country
suggests positive growth by the end of 2009
degree of integration in global munity. its into investments may have and the reestablishment or
economic processes. Ironically, If you look at Russia through a positive effect on the econom- even complete reform of the
it was its integration in the glob- the prism of newspaper and TV ic situation in the future (for the regulatory framework. At each
al economy that exposed Rus- reports, biased as they may be, time being the banks have of these stages, the govern- Hopes for Economic
sia to the effects of the global you won’t get a really good im- sharply reduced the amount of ment was able to set the right
economic crisis. Some 20 or 30 pression of the country. But credit in the economy and at tasks and to work out the ap-
years ago, in the time of the businesses are built not on im- the same time have raised in- propriate solutions. Nothing is
Rest and Recovery
Iron Curtain, the country would pressions. terest rates, but in the future ever perfect, but they did quite
have suffered less serious effects I know that this feeling exists the situation will get back to well.
of a global downturn like this. and is rather widespread; it is normal). Russia remains as ap- Today it is time to move on
Today, foreign market develop- lack of knowledge that breeds pealing as ever to foreign inves- to the next stage and develop government will directly sup- "In the third quarter, we ex-
ments affect Russia, and in turn, fear. Still, those who once made tors, and under certain condi- a mechanism of system admin-
CONTINUED FROM PAGE 1
port 1,500 companies that pro- pect the benefits of devalua-
Russian economic activity im- the decision to start a business tions holdings in Russia that istration in order to deal with The good news is that analysts duce about 85 percent of Rus- tion to become increasingly ev-
pacts global economic trends. in Russia have never regretted have fallen in value may attract the problem of, for instance, agree in their strategy papers sia’s GDP. The main criteria to ident, along with the first signs
Russia is still recognized as an it. Consider also that Russia’s in- long-term investors. Experts corruption. that the ruble will have a new get on the list are to have a of improvement in the global
attractive market by foreign in- vestment cost recovery and reckon that among the BRIC It is an encouraging sign that value by 2009, setting the stage turnover of 15 billion rubles, economy. Demand for metals
vestors, despite the crisis. More- project yield, including margin countries Russia ranks second the campaign against corrup- for the subsequent rally. employ more than 4,000 peo- should start to pick up as the
over, Russian companies have and workforce skills, are several behind China in terms of its abil- tion was named a top govern- In its strategy papers, UBS ple and be the major employer de-stocking process comes to
started actively expanding into times greater than, for exam- ity to bring in investment. ment priority, together with de- in Russia sums up what most in the city (Russia has a lot of an end, in turn driving up met-
international markets and pur- ple, those of China. velopment of regional of the investment banks are say- cities with just one large plant als prices.
chasing international assets. The True, more guarantees and Still, by the end of 2008 many infrastructure, removal of ad- ing: that Russia is a special case or mine and no other employ- The oil price should also start
economic slump has interrupt- support from the state would rating agencies had begun to re- ministrative barriers and re- in the merging markets block. ment alternatives). to recover as demand stabiliz-
ed this process. However, I be very welcome, but I would view their ratings downwards. building of the pool of quali- Markets have sold off heavily It remains to be seen if this is es and the effect of financial
would predict that Russia, India like to emphasize that today This is unlikely to boost inves- fied professionals. and the central bank has lost enough, or even if it is, if it can market disturbances on com-
and China will not only safely Russia has developed unique tors’ confidence… The business community $115 billion of its reserves since be delivered efficiently enough modity prices is no longer felt.
recover from the after-effects of mechanisms to support com- Any credit rating is a risk prob- played an important role in pro- August, but from a macro point to make a difference. Moreover, Infrastructure projects should
the crisis but also take leading munication between the gov- ability analysis, which assumes moting that decision, as the of view Russia still looks rela- throwing money at the econo- also be up and running at this
roles in the development of a ernment and the business com- uncertainty. Therefore, any as- government sees a construc- tively strong. my will have to be accompanied stage," according to Renais-
global post-crisis economic munity. These mechanisms, for sessment, even one by a repu- tive dialogue with business as With the international capital by a major stepping up of re- sance Capital. "But perhaps the
model. example, the Foreign Invest- table rating agency, is to a sig- an integral part of its domes- markets in flames, it stands to forms and a loosening of the most remarkable facet of the
ment Advisory Council (FIAC), nificant degree partial. In our tic policy. Russia already ranks reason that the Russian state will state's control over key sectors. past six months is that the me-
Speaking of forecasts, how do enable those concerned to find opinion, in the present situa- among the top-quality markets play a key role in determining Still, the economic outlook in dium-term investment thesis
you think the crisis will affect prompt solutions for promot- tion the downgrading of Rus- in terms of consumption and the impact of this crisis on Rus- the first quarter of 2009, and underpinning Russia remains
Russia? ing a favorable business envi- sia, like that of many other coun- resources. Seen from this point sia’s performance in 2009. The possibly first half, is shocking. In more or less intact.”
The world will see a certain shift ronment. tries, reflects a worldwide of view, the crisis represents a state offered a huge amount of the fourth quarter of 2008, fi- By the final quarter of 2009,
in the international balance of tendency to inflate risks, and very interesting turn of events support and promised over nance stopped flowing, goods Renaissance imagines Russia
power due, for example, to the Your statements sound very op- correspondingly, in my opinion, that will set, to some extent, $200 billion for 2009. Then in stopped being delivered, and in- humming along, from negative
increasingly important role timistic. Especially if we take to increase the premiums for the priorities for the 21st cen- December, Prime Minister Vladi- vestment plans were can- growth to 5-7 percent growth.
played by the BRIC countries into account the figures on the those risks. tury.
-
mir Putin announced that the celled. By the end of the year, growth
in the global economy. The U.S. slump in financial activity... will be driven by consumption
influence in the world today is At the very least, the govern- and investment, and the stron-
unlikely to dramatically de- ment’s timely anti-crisis mea-
Output/investment declines
Economic forecast
gest recovery will be in the min-
crease in the near future, but sures have made it possible to ing, transport and manufactur-
it will be counterbalanced by preserve the banking system, ing sectors.
growth in the emerging econ- and they have also made it clear
YoY capex change 2008E-2009E
2008E 2009E 2012E
In contrast with many de-
omies. that the country’s leadership is
GDP growth, % 6,7 4,0 6,0
veloped countries, Russia’s re-
The second major trend is prepared to take tough action Forecast as at 2Q08 Current forecast turn will be unencumbered by
the recognition of economics against the crisis. The devalua-
GDP defiator 23,5 10,5 7,6
large volumes of household
over politics. Multinationals and tion has led to a reduction in
Oil&Gas 7,30% -19,2%
GDP, $bn 1,746 1,641 2,781 debt, and this should support
major national corporations act costs for exporters, and also for
Telecoms -6,86% -30,6%
a rapid recovery of private con-
as stabilizers, balancing not Russian producers as a whole.
PPI, YoY, % 18,0 15,4 7,4
sumption. “We firmly believe
only economies but also polit- This boosts their relative price
Real Estate 13,8% -24,3% Industrial production 4,8 3,8 4,6
that, as a result of government
ical processes. Take, for exam- competitiveness. It will improve policy and a turnaround on the
ple, relations between Russia the position of exporters in for-
Financials 15,2% 13,8%
Fixed Investment growth 11,0 3,0 8,0
global markets, the mood mid-
and the U.S. These relations eign markets and also of those Consumer & Retail -34% -84%
Real average wage growth, YoY, % 10,5 4,7 6,5
year will be drastically different
have cooled, to put it mildly, in who are competing with im- Average wage, $/month 681,5 657,0 1,098.6 from now,” Renaissance con-
recent years. Nevertheless, it ports on domestic markets (al-
Chemicals & Engineering -10% -17%
cluded.
Real disposable monetary income -
was the U.S. business commu- though many enterprises have
Metals&Mining 20% -70% growth, YoY, %
9,2 4,9 5,9
nity that strongly supported the still run into the problem of ser- Full version is available on
continuation and expansion of vicing foreign currency loans SOURCE: BLOOMBERG, RENAISSANCE CAPITAL SOURCE: BLOOMBERG, RENAISSANCE CAPITAL www.rbth.ru
U.S.-Russia Business Council International Forum & Exhibition Russia Power Conference and Navitech-Expo '2009
Global
Legal Conference “Property Worldwide” Exhibition May 12-15, Expocenter, Moscow
February 26, National Constitution April, 22-26, Crocus Expo, April 28-30, Expocenter, Moscow The first Russian exposition devoted
Center, Philadelphia Moscow Russia Power services both the stra- to GLONASS was presented within the
Russia
Conference “Russia: From Legal Nihil- The largest and most significant exhibi- tegic and technical information needs Sviaz-Expocomm’2007 International Exhi-
ism to Rule of Law” tion in the residential and commercial of industry professionals. With more bition. Sviaz-Expocomm’2008 featured the
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Business
event gathers leading representatives of ference that combines Russian and displayed products of such leaders of the
10th International Forum “High- construction and real estate companies, international expertise at the highest Russian navigation industry as the Rus-
Tech XXI–2009” banks and insurance, and investment level, Russia Power is the place to turn sian Research Institute of Space Device
Calendar
April 21–24, Expocenter, Pavilion groups under its roof. knowledge into power. Engineering (RNII KP), the Russian Institute
Forum, Moscow A distinctive feature of the exhibition is As a mirror to the electricity industry, of Radio Navigation and Time (RIRV), etc.
One of major topics of the forum is the creation of a single exhibition ground the 2009 Russia Power Conference and The exhibition be held simultaneously
problems in introducing development for the submission of mega-projects Exhibition will provide insights into new with the International Satellite Navigation
Find more in “Global Calendar”
of a high-tech complex and marketing for the construction of real estate sold regulatory structures and investment Forum and the Sviaz-Expocomm Interna-
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of high-tech production. throughout Russia and the world. opportunities. tional Exhibition.
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